A Bureau of Economic Analysis (BEA) report shows that U.S. corporate profits surged to record highs in the second quarter of 2021.
The increase is due to more demand and higher prices as the economy starts to rebound from the pandemic, Reuters reported.
According to the BEA report, the real gross domestic product (GPD) increased at an annual rate of 6.6% for the second quarter, .3% higher than the first quarter.
"The increase in real GDP in the second quarter reflected increases in personal consumption expenditures (PCE), nonresidential fixed investment, exports, and state and local government spending that were partly offset by decreases in private inventory investment, residential fixed investment, and federal government spending," the report said.
Real gross domestic income (GDI) increased 1.6 % for the second quarter, compared to 6.3% in the first quarter, with the average GDP and real GDI increasing 4% in the second quarter as well, according to the report.
Corporate profits increased $234.5 billion in the second quarter, compared with an increase of $123.9 billion in the first quarter, the report said.
Profits for domestic financial corporations increased $53.7 billion for the second quarter after an increase of only $1.3 billion in the first. Profits of domestic nonfinancial corporations also increased to $169.8 billion.
The jump in profits comes amid the coronavirus pandemic as many businesses face increased costs for raw materials and labor. The surge in infections driven by the Delta variant has led to reduced business in the travel industry, which is leading many economists to cut their third-quarter growth estimates, Reuters reported.
"Based on the profits data, any slowdown in growth as a result of slower consumer spending is likely to prove temporary," said Conrad DeQuadros, senior economic advisor at Brean Capital in New York.
According to the report, receipts also increased to $31.3 billion and payments increased $20.3 billion during the second quarter.
The current dollar GDP during the second increased to 13.2% at an annual rate, or $693.2 billion, while the first quarter only saw a 10.9% increase, or $560 billion.
Reuters reported that the pre-tax profits as a share of GDP rose to 12.3%, the highest it has been since 2014.