Interesting bit of big picture perspective here from Mark Thoma’s blog. The chart shows after tax corporate profits as a percentage of GDP.
Depending on your perspective you might be inclined to come to extremely different conclusions about this situation:
- Some might be inclined to believe that this means the stock market is extremely undervalued.
- Some others might be inclined to believe that this is an entirely unstable and unsustainable environment that is likely ripe for a bit of mean reversion which would bring us back down to something closer to the 6-7% range.
What do you think?