Not sure if any of you follow GMO or James Montier, but I love pretty much everything he writes. He wrote a paper a few years ago called “What goes up must come down” (referring to the sky high corporate profit margins). He uses Kalecki’s profit margin to show how the gov’t deficit drove that and how it breaks down over time. Here is a link to the paper: http://www.lwmconsultants.com/wp-content/uploads/2012/04/What-goes-up-must-come-down.pdf
I won’t get into the derivitation (it’s in the paper), but the equation is:
Profit = Investment - Household savings - government savings - Foreign savings + Dividends
My question: I’ve tirelessly searched through the Fed Flow of Funds/NIPA data in Bloomberg to find the right accounts. I’ve gotten close, but have not been able to pin down the right ones. Anyone know the right Bloomberg tickers? Here is what I’ve used…
Government savings – FOF Consolidated Net Government Savings NIPA (SAINCFNS in Bloomberg)
Household Savings - FOF Households and Nonprofit Organizations Net Savings NIPA (SAINHHSA)
Foreign Savings – US Current Account Balance (USNCBAL)
Net Investment – BEA Net Domestic Investment (SVIVNDIV)
Dividends – FOF Corporate Business Net Dividends NIPA (NNCBDVDN)
I’m thinking my Investment and Dividend series may be the incorrect series. Only reason I need it is to build a macro model of corporate spreads.