At an annualized rate of $3.229 trillion in the first estimate for the second quarter, year-over-year after-tax corporate profits rose a strong 11.2 percent compared to last year's second quarter. This exceeds 10.0 percent growth in the first quarter. When including inventory valuation and consumption adjustments, after-tax profits of $3.425 trillion in the second quarter were up 6.6 percent on the year. This compares with 5.3 percent previously. Taxes on corporate income, at a $650.8 billion annual rate in the second quarter and which are calculated on this basis, were up 14.1 percent year-over-year versus an 11.1 percent increase in the first quarter.

Corporate profits are derived from the national income and product accounts and are expressed in several measures. Econoday's focus is on the most relevant measure for the total economy, after-tax profits.

Corporate profits are the lifeblood of investment spending. Profits are the income of a corporation. When profits are strong, then companies will be able to increase their capital spending. This could allow better growth prospects for a company and is likely to increase its underlying value. When corporate profits decline, then capital spending tends to decline. Without the potential for growth, a company could be at a disadvantage, particularly in our global economic environment.

Corporate profits also reveal the health of an organization. When a company's profits are anemic during economic expansion, it suggests that the company is not performing efficiently. The value of an inefficient company is determined by its stock price. Thus weak profits signal lower stock prices. When a company's profits are relatively strong, even during an economic downturn, it usually means that the organization is well-managed. The higher value for this type of company is reflected in a higher stock price.