Nonfinancial Corporate Business: Nearly 100% of Revenue Growth in Early 2023 Driven By Price

In early 2023, the price increase on goods and services sold by nonfinancial corporate businesses accounted for nearly 100% of their revenue growth. That's an unusual development and not a good one. In previous periods when price increases accounted for revenue growth, the economy was in recession or dangerously close to one.

Fast and broad price increases have helped companies offset rising wages and higher interest rate costs. As price increases slow, the balancing act of managing expenses becomes much more difficult. In prior episodes, the crossover between revenue and prices signaled a sharp contraction in operating margins.

The revenue and price data come from the income side of the GDP accounts. The data are value-added concepts used to estimate GDP output and income numbers. Second quarter data will be available on August 30.