Corporate Profits- 3rd Quarter 07

 Profits from current production (corporate profits with inventory valuation and capital
consumption adjustments) decreased $20.5 billion in the third quarter, in contrast to an increase of $94.7
billion in the second quarter.  Current-production cash flow (net cash flow with inventory valuation and
capital consumption adjustments) -- the internal funds available to corporations for investment --
decreased $21.1 billion in the third quarter, in contrast to an increase of $37.4 billion in the second.

 
 Domestic profits of financial corporations decreased $32.5 billion in the third quarter, in contrast
to an increase of $52.7 billion in the second.  Domestic profits of nonfinancial corporations decreased
$14.4 billion in the third quarter, in contrast to an increase of $25.3 billion in the second.  In the third
quarter, real gross value added of nonfinancial corporations increased, and profits per unit of real
product decreased.  The decrease in unit profits reflected a decrease in unit prices and an increase in unit
labor costs that were partly offset by a decrease in unit nonlabor costs.

 
 

 Profits before tax decreased $51.8 billion in the third quarter, in contrast to an increase of $115.7
billion in the second.  The before-tax measure of profits does not reflect, as does profits from current
production, the capital consumption and inventory valuation adjustments.  These adjustments convert
depreciation of fixed assets and inventory withdrawals reported on a tax-return, historical-cost basis to
the current-cost measures used in the national income and product accounts.  The capital consumption
adjustment decreased $3.0 billion in the third quarter (from -$234.4 billion to -$237.4 billion), compared
with a decrease of $6.5 billion in the second.  The inventory valuation adjustment increased $34.4
billion (from -$54.7 billion to -$20.3 billion), in contrast to a decrease of $14.5 billion.


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