NEW YORK, May 5 (UPI) -- The Conference Board said Wednesday robust corporate profits and strong economic indicators are providing a solid base for the ongoing U.S. economic recovery.
The board said corporate profits are rising at a 30 percent annual rate because of huge gains in domestic corporate profits, and because strong economic growth and a low dollar are boosting business receipts from abroad.
Gail Fosler, executive vice president and chief economist of the Conference Board, said productivity and cost cutting have strengthened corporate profits. Corporate revenue is also growing almost 7 percent annually, faster than Gross Domestic Product.
"It is projected to grow at this rate or faster over the next 18 months," Fosler said.
The board said a shift in profits from the financial sector to non-financial corporate business is underway. Financial services activity rose gradually over the past decade, but profitability surged at the end of the 1990s as interest rates declined.
Now with the economy expanding, the non-financial business sector is driving profitability. Financial services profits have dropped as a share of total profits in 2002-2003, with margins squeezed by very low interest rates, weak loan demand, and declining demand for many higher-margin investment banking and risk management products, the boardsaid.
