Michael Perelman wrote:
In the national income accounts, the first estimates of profits are based on what corps report to shareholders. As the IRS tax data becomes available, which is with a delay of two or three years, BEA uses that to update their figures when the annual revisions are released every August. It's been a while since I talked with the guy who does this, but I think they're up to 1999 now - so when the revisions come out in Aug 2003, we'll have definitive figures for 2000. They revised down the profits estimates throughout the late 1990s, and I suspect we're in for more of the same with the next batch of revisions.Others (Nomi, Doug, etc.) know more about this than I do, but some large companies massaged their profit rates (GE, Microsoft) to make them more stable. Could this have affected the results?
So earnings management should have little effect on the NIPA numbers through 1999.
Doug
