US – Corporate Profits decreased $6.4 billion in the first quarter, a very bad news for private sector non-farm employment

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) , in contrast to an increase of $16.8 billion in the fourth quarter. Current-production cash flow (net cash flow with inventory valuation adjustment) — the internal funds available to corporations for investment — decreased $123.9 billion in the first quarter, in contrast to an increase of $44.8 billion in the fourth…

Profits after tax with inventory valuation and capital consumption adjustments
decreased $89.7 billion in the first quarter, in contrast to an increase of $17.5 billion in the fourth…

via News Release: Gross Domestic Product.

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Note from JMM: Has shown by the first figure, Corporate Profits are a very good cyclical indicator. They drop during recession (the shaded areas), together with investment (FIG 2) . As some economist says: Workers spend what they earn, capitalists earn what they spend.

This is a very bad news for private sector non-farm employment (FIG 3) and reinforces the negative signals from received recently from the Curent Population Survey and Unemployment Claims data. (See Unemployment Claims in US – Very bad news: Revised Nbre @ 400K and Still Near 2012 High )

FIG 1

FIG 2

FIG 3