Corporate Profit Recovery Uniquely Robust After 2008 Meltdown
The following graph (from Real World Economic Review) shows how various sectors of the economy have recovered after the 2008 meltdown, compared to earlier postwar recoveries. Notice especially the bars for government spending in the current recovery (significantly down compared to earlier recoveries) and for corporate profits (significantly up).
Layman’s questions: Is there a cause and effect relationship between weaker government action in a recovery and higher corporate profits? To what extent do corporate profits derive from taxpayer bailouts (which, of course, are a form of government action)?
