Third-Quarter 1983 Profits, Productivity, And Capital Spending - U.S. Profits, Capacity Utilization, And Inflation

Confidence in the strength of the U.S. economic recovery was considerably enhanced by third quarter 1983 profits, which showed a 12.8-percent increase over those in the second quarter (table I). Although the increases were not as great as between the first and second quarter of 1983, profits have grown each quarter since fourth quarter 1982. Both total profits and profits per unit of output increased, which the Bureau of Economic Analysis (BEA) attributes to decreases in labor and nonlabor costs (per unit of output), as well as to moderate price increases. [ ] A number of durable goods sectors, however, continue to show profit declines, especially electrical and non-electrical machinery. Profits in the primary metal industry are still negative, but the economic picture of this industry is improving. Between the second and third quarters of 1983, capacity utilization increased somewhat in primary metal manufacturing and stone and earth mineral mining but did not change at all in metal mining. Capacity utilization in metal materials increased from 47.4 percent in the fourth quarter of 1982 to 64.2 percent in the third quarter of 1983 (table 2).