STOCKS | U.S. Corporate Profits Hit Record High as Wage Growth Lags

U.S. corporate profits reached a record high, while the share of economic output going to workers fell to a historic low. According to Sina Finance, data from the Bureau of Economic Analysis showed that pretax corporate profits in the second quarter reached an annualized $4.8 trillion, equal to 18% of national income and the highest share since World War II. Employee wages and benefits fell to 60% of national income, the lowest level since the 1950s. JPMorgan economist Abel Reinhart said labor compensation has been shrinking as a share of national income over the long term, while much of that income has been converted into corporate profit margins. The article said the gap has deepened social division in the United States under U.S. President Donald Trump, with more voters expressing dissatisfaction with the economy. It added that this year's profit surge helped push U.S. stocks to record highs, supported by the artificial intelligence boom, higher oil prices after the Trump administration went to war with Iran, and stronger returns in retirement accounts. Inflation also outpaced wage growth, with real hourly earnings down 0.2% year over year in July. Elizabeth Pancotti, vice president of policy at the progressive think tank Groundwork Collaborative, said gains at the top far exceeded growth for people at the bottom, and described the economy as split into two separate systems: one for people living mainly on investments and passive income, and another for ordinary workers who go to work every day. The article said Trump's large tax cuts mainly benefited companies and high-income groups, while funding for programs such as food stamps was reduced. It added that the widening gap between corporate and investor wealth on one side and low-income households on the other has fueled stronger voter backlash and growing concern over inequality.