A Buoyant Third Quarter

Normally, corporate profits in many industries tend to tail off during the lazy summer doldrums. But this year, buoyed by a rising tide of spending by consumers and businessmen, third-quarter profits of many firms have floated to their highest levels in years. The broad range of industries reporting gains reflects the sustained growth of the whole economy, an expansion that is likely to pick up ever more speed in the months ahead. Otto Eckstein of TIME'S Board of Economists predicts that after-tax corporate profits for the entire year will rise an estimated 16% above those of 1971.

New York's First National City Bank reported last week that third-quarter after-tax earnings for 744 major corporations climbed 20% over the same period last year, and the increase for the first nine months came to 15%. The steel, office-equipment, electrical-machinery and paper industries totted up some of the largest rises. For the economy as a whole, earnings after taxes were running at an estimated annual rate of $55 billion, an increase of $3.5 billion over the second-quarter pace. Profit increases at some companies were nothing short of spectacular. Chrysler Corp. quintupled its earnings, to $31.9 million, its biggest third-quarter jump in twelve years; St. Regis Paper Co. profits were up 153%, to $10.6 million; and National Steel Corp.'s grew 272%, to $15.2 million. Other big corporations showing earnings advances of more than 20%: International Paper, Eastman Kodak, AT&T and RCA. In stark contrast, General Motors reported a 41% profit drop, largely caused by start-up costs for redesigning 1973 models.

Despite soaring profits, relatively few corporations have yet breached the profit-margin limits imposed by the Price Commission. Businessmen insist that the increases are not so great as they seem because last year's earnings were abnormally low. Even so, the roseate profit reports are certain to inflate labor demands next year when several important union contracts come up for renegotiation. One hint of Big Labor's mood: United Auto Workers President Leonard Woodcock has said that automakers' fat 1972 profits could pay for almost any wage packet that his union might demand.

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