Given that we are entering the peak week for company reporting during this earnings season, we thought it useful to have a bigger picture perspective as to where aggregate U.S. corporate profitability currently stands. But rather than looking at the classic profits-to-GDP measure, in this week’s Economics Weekly we look at the return on equity (ROE) and examine its component parts. This exercise helps to give us a clearer understanding as to what is driving returns and, in turn, the sustainability of current levels.
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Richard de Chazal, CFA is a London-based macroeconomist covering the U.S. economy and financial markets.