U.S. Corporate Profits Climbed as GDP Ticks Down to 1.1%

A key measure of corporate profits rose this spring for a second straight quarter alongside modest growth in the overall economy, though U.S. businesses remain under pressure from global weakness and other forces.

Corporate profits after tax, without inventory valuation and capital consumption adjustments, rose 4.9% from the prior quarter to a seasonally adjusted annual level of $1.627 trillion in the second quarter, the Commerce Department said Friday.

Profits had jumped 8.9% in the first three months of 2016, after dropping in three of the previous four quarters. Still, the trend remains weak and second-quarter profits were down 2.2% compared with a year earlier. An alternative measure, pretax profits with inventory valuation and capital consumption adjustments, declined 1.2% in the second quarter from the prior three months.




U.S. GDP Growth in First Quarter Revised Up to 1.1% Rate

WASHINGTON—The U.S. economy expanded more than previously thought in the first three months of the year, but underlying trends suggest it remains vulnerable in the face of global economic turmoil.

Gross domestic product, the broadest measure of goods and services produced across the U.S., grew at a seasonally adjusted annual rate of 1.1% in the first quarter, the weakest pace in a year, the Commerce Department said Tuesday. The agency previously estimatedthe economy grew at a 0.8% pace.

The main factors behind the upward revision: The U.S. exported more goods and services than previously thought. And companies spent more than initially estimated on software and research and development.


Fed Leaves Policy Rate Unchanged, Lowers Outlook for Increases


WASHINGTON—The Federal Reserve held its benchmark lending rate steady on Wednesday and officials lowered projections of how much they expect to raise short-term interest rates in the coming years, signs that persistently slow economic growth and low inflation are forcing the central bank to rethink how fast it can move rates higher.

“We are quite uncertain about where rates are heading in the longer term,” Chairwoman Janet Yellen said at a press conference following the Fed’s two-day policy meeting.

New projections show officials expect the fed-funds rate to rise to 0.875% by the end of 2016, according to the median projection of 17 officials. Their forecasts imply they see two rate increases this year. That is the same number of increases they saw when they last released projections in March. However a greater number of officials now see one increase, rather than two. In March only one official saw one rate increase this year and seven saw three or more. Now six officials see one increase this year and only two see three or more.

Ms. Yellen said a rate increase at the Fed’s next meeting in July is “not impossible,” but she doesn’t know how quickly officials will gain confidence the economy is on firm footing. “We need to assure ourselves that the underlying momentum in the economy has not diminished,” she said.


U.S. First-Quarter GDP Growth Revised Higher; Corporate Profits Rose

The broader economy seems on track to rebound after a weak performance over the past few quarters. Gross domestic product, a broad measure of goods and services produced across the U.S. economy, expanded at a 0.8% seasonally adjusted annual rate in the first three months of 2016, the Commerce Department said in updated figures out Friday. That was up from an initial estimate of 0.5% growth but still represented a deceleration from the fourth quarter’s 1.4% growth rate.