Wednesday, October 15, 2008

Economic Outlook: Indicators of the Marginal Product of Capital

Corporate profits per dollar invested were very high through 2008 Q2. Indicators of 2008 Q3 are coming out now:

NonFinancial Corporations

Financial Corporations

I see no evidence here that a credit crunch is getting in the way of important business. In case you want to weight these items, note that total earnings for the quarter are $2.8 billion (IBM), $1.89 billion (Coke), $0.12 billion (Hershey), -$0.24 (Contin), $2.7 billion (Nokia), $1.35 billion (Google), $1.53 billion (Sch), $0.92 billion (Honey), $0.53 billion (JP), $1.64 billion (Wells), -$2.8 billion (Citi), $0.92 billion (UnitedHealth), -$5.2 billion (Merrill). I never said that it would be pretty for the FIRE industry!

1 comment:

Bob Murphy said...

Let me preface this by saying this is my new favorite blog; my friend recommended it a couple of weeks ago and now I am hooked.

Would you mind explaining in a stand-alone blog post what you mean by "the marginal product of capital"? Incidentally, I have a PhD in economics and actually did a dissertation on capital theory. But in light of the Cambridge Capital Controversy etc., I'm not sure what you mean by that term, especially as applied to the entire economy for a particular year (like 1931).

Thanks for any clarification.