Returns for Domestic Nonfinancial Business

By Bonnie A. Retus and Marina K. Rouleau  |  May 28, 2026

Once a year, the U.S. Bureau of Economic Analysis (BEA) reports on sector rates of return for domestic nonfinancial corporations, for nonfinancial industries, and for 14 major nonfinancial industry sectors, including mining, utilities, construction, manufacturing, wholesale trade, and retail trade. These broad measures of profitability, based on returns on produced assets, may be useful to economists and policymakers. Industry sector and corporate business rates of return are available through 2024; these rates of return reflect revised statistics from the 2025 annual updates of the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts (IEAs).¹ Various Tobin's Q ratios, which compare the financial market value of assets with the replacement-cost value of produced assets, are also presented in this article.

The rates of return presented in this article are calculated as the ratio of the net operating surplus to the net stock of produced assets.² The net operating surplus reflects the return to capital and is presented in table A. Produced assets are presented in table B. For nonfinancial corporations, the net operating surplus reflects statistics from the NIPAs and is defined as the sum of corporate profits from current production, net interest payments, and net business current transfer payments.³ The net operating surplus for nonfinancial industries reflects statistics from the IEAs and is a broader concept that includes proprietors' income. For both nonfinancial corporations and nonfinancial industries, the statistics on net stock of produced assets are from BEA's fixed assets accounts. To calculate the Q ratios, additional statistics on financial market values are drawn from the Federal Reserve Board's Financial Accounts of the United States.

Nonfinancial corporate rates of return remained the same on a before-tax basis and decreased on an after-tax basis in 2024. The after-tax rate of return was 8.7 percent in 2024, a decrease of 0.2 percentage point from 2023 (chart 1 and table C). The before-tax rate of return was 10.7 percent in 2023 and 2024. Since 1970, before-tax rates of return have ranged from 6.9 percent in both 1982 and 2001 to 11.4 percent in 2021. In the 1960s, average rates of return were higher, peaking at 13.6 percent in 1965 and 1966. Net operating surplus as a share of net value added decreased on a before- and after-tax basis in 2024 (table D).

Other measures of profitability—such as BEA's measure of corporate profits from current production—increased in 2024. The measures presented in this article exclude the volatile financial sector and compare returns of nonfinancial corporations with their assets rather than with gross domestic product.

[View larger chart]

Rates of return can also be calculated for industry sectors using statistics from the IEAs, which provide annual statistics for 71 industries that together account for all U.S. economic activity. Similar to the method used to calculate the rates for nonfinancial corporations, the rates of return for industry sectors are calculated as the net operating surplus divided by the net stock of produced assets. For nonfinancial industries, net operating surplus as a share of net value added is calculated as net operating surplus divided by net value added. The balance for each published sector represents the share of net value added attributable to compensation of employees and taxes on production and imports less subsidies.

Similar to the net operating surplus of nonfinancial corporations, the net operating surplus of nonfinancial industries reflects corporate profits from current production, business transfer payments (net), and net interest payments. However, as noted, it also reflects proprietors' income, which includes the income of sole proprietorships and partnerships. For this article, the housing component of the real estate sector, which includes owner-occupied housing, is excluded from the nonfinancial industry statistics to allow for a better comparison with the nonfinancial corporate returns data, which do not reflect home ownership.

Much of the difference between the sum of the nonfinancial industries rates of return and the corresponding corporate rates of return can be attributed to the inclusion of proprietors' income in the industry net operating surplus. However, several statistical differences between the IEAs and the NIPAs also affect the estimates. Notably, all IEA statistics are presented on an establishment basis, whereas the NIPA measure of corporate nonfinancial net operating surplus is presented on a company basis. As a result, the nonfinancial industry measures reflect adjustments that (1) exclude the financial services-producing establishments of primarily nonfinancial corporations and (2) include the nonfinancial services-producing establishments of primarily financial corporations. In addition, the IEA net operating statistics also include a share of the NIPA statistical discrepancy. The annual patterns of change for the IEA nonfinancial industries aggregate rate of return and the NIPA nonfinancial corporate rate of return of each are similar despite the differences explained (chart 2).

The overall rate of return for nonfinancial industries in 2024 was 14.3 percent, a decrease of 0.1 percentage point from the 2023 rate (table C). Net operating surplus as a share of net value added decreased 0.6 percentage point to 29.8 percent after an increase of 0.9 percentage points in 2023 (table D).

[View larger chart]

This article presents a disaggregation of the rates of return for several industry groups—for example, manufacturing, transportation and warehousing, information, and professional and business services, among others (table C).

The statistics continue to show stability despite moderate declines across 8 of the 14 industries. The largest decline of 1.3 percentage points can be seen in agriculture, forestry, fishing, and hunting, followed by mining, which decreased 0.9 percentage point, continuing the decline seen in 2023 for these industries since their 2022 peak. The largest increases can be seen in educational services, health care, and social assistance and “other services, except government,” which increased 0.8 percentage point and 0.6 percentage point, respectively. Highlights include the following (chart 3):

• The rate of return for agriculture, forestry, fishing, and hunting declined to 9.8 percent. This is the second consecutive decline since the peak in 2022 of 15.5 percent though the 2024 level is still above the lower rates seen during the pre-pandemic period of 2015–2019.
• Most industries appear to be trending towards pre-pandemic average rates of return except for information, real estate and rental and leasing, and retail trade. The rate of return for information decreased to 10.9 percent in 2024 following a decline in 2023. This is the lowest rate in the time series since 2002 (10.2 percent). This decline in 2024 also marks the fifth consecutive decline for the rate of return which has been declining every year since the 13.5 percent rate in 2019.
• Conversely, real estate and rental and leasing has maintained an elevated post-pandemic rate of return of 26.7 percent. This is the second-highest rate of return in the time series since the 26.9 percent seen in 2021. It is also the second consecutive increase, a trend seen in other services-based industries.
• Similar to real estate and rental and leasing, retail trade has maintained an elevated post-pandemic rate of return of 15.3 percent, an increase of 0.3 percentage point. This is the second-highest rate of return in the time series since the 16.4 percent seen in 2021.

[View larger chart]

Tobin's Q, or simply “Q,” is the ratio of financial-market valuation of corporate assets to the current-cost value of the assets. A Q ratio above 1 indicates that financial markets value corporate assets above their replacement cost; as a Q ratio rises above 1, companies may be more inclined to make direct investments in plant and equipment. A value of Q below 1 indicates that the financial markets value corporate assets below the replacement cost; as Q falls below 1, companies may be more inclined to buy other companies for their capacity rather than make direct investments.

The three Q-type ratios for domestic nonfinancial corporations presented here are defined as follows:

• Q1 is calculated as the market value of outstanding equity divided by the net stock of produced assets.
• Q2 adds the book value of outstanding corporate bonds to the numerator used in Q1. The inclusion of bonds makes Q2 a more complete measure of invested capital, but including them at historical cost is clearly inconsistent with the underlying rationale for Q, which is to provide a comparison of market valuation with replacement cost.
• Q3 adds an estimate of the market value of outstanding corporate bonds and net liquid assets to the numerator used in Q1.⁴

All three Q ratios increased in 2024 (chart 4 and table E) after also increasing in 2023, remaining above their lows reached in 2008, when they fell below 1, partly reflecting recession-related stock market declines.

[View larger chart]