|Usual Suspect Number Two: Capital Investment |
Such have-our-cake-and-eat-it-too behavior could be justified if after-tax corporate profits were rising as a percentage of GDP. They were, and significantly so, from 1986 through the onset of the Asian crisis at the end of the third quarter in 1997. But the loss of global customers and the cannibalistic competition from new domestic investment lowered this profitability precipitously, all the way until the end of the first quarter of 2002, the very time at which the bottom dropped out of stocks.
|Usual Suspect Number Three: Corporate Profits |