All of those headlines about record corporate profits turn out to be a little misleading. As Justin Fox notes at the Harvard Business Review, corporate profits are hitting all-time highs only if you look at nominal dollars. If you adjust for inflation, corporate profits aren't quite as high as they were before the Great Recession, although they're still very high.

But the more interesting wrinkle may be something else Fox points out: Profits aren't evenly distributed across the economy:

Pre-tax domestic nonfinancial corporate profits — a mouthful, but also seemingly a fair measure of the underlying health of business in America — are nowhere near record levels as a share of national income. They exceeded 15% of national income once in the late 1940s, and repeatedly topped 12% in the 1950s and 1960s; in the third quarter of this year, they were 7.03% of national income.
This might go some way toward explaining the seeming disconnect between booming corporate profits on the one hand and a very cranky business community on the other. For much of the business community, profits aren't that high by historical standards. These people have every right to be cranky.
Who is doing better? Well, according to the BEA's data, financial industry profits and "rest of world" profits — that is, the money U.S.-based corporations make overseas — are relatively much higher now than they were in the 1950s or 1960s. And the taxes paid by corporations are much lower now than they were then, as a share of national income.
So the reason that corporate profits are near their all-time highs would appear to be that financial corporations (mainly big financial corporations) and multinationals are making lots of money and paying less of it out in taxes. Hmmmm.

The corporate profit picture would seem to mirror what's been going on in the income distribution for individuals for the past few decades. The money is increasingly going to a select group at the very top of the economic food chain, who are able to reap the rewards of global growth, play the financial system astutely, and avoid taxes.



This would indeed help explain why so many business leaders keep complaining about the lousy environment. On the other hand, it should also serve as a cautionary note to President Obama, as he prepares to appoint some new economics advisers. The argument for appointing somebody like Roger Altman to replace Larry Summers is that Altman could help improve relations with the business community. But Altman comes from Wall Street. And it's not at all clear that the financial industry speaks for the rest of corporate America--or that corporate America would see a financial industry veteran as somebody particularly sympathetic to their situation.

Of course, I don't think Obama should be so obsessed with satisfying the business community in the first place. So perhaps I'm not the best authority on this.