In this work of effective demand, the profit rate can be seen as a function of labor share and unemployment.

Basic equation based on...

Profit rate limit for optimization of capacity utilization, United States = labor share index * 0.76 / (1 - unemployment rate)

The dynamics behind this equation are not going to be discussed in this post.

**The terms of the regression...** (link to FRED data)

Dependent variable

Annual corporate profit rate

National income: Corporate profits with IVA and CCAdj: Profits after tax with IVA and CCAdj, Billions of Dollars, Not Seasonally Adjusted / Gross National Product, Billions of Dollars, Not Seasonally Adjusted

Independent variables

(1 - annual unemployment rate/100)

Annual nonfarm Business Sector: Labor Share, Index 2009=100, Seasonally Adjusted /100 * 0.76

### Regression from 1948 to 2015

The regression line is blue. The general tendency comes out over almost 7 decades.

### Regression from 1991 to 2015

The blue regression line tightens up to the profit rate line after 1991. The adjusted R Square is already over 90%. P-values are within limit.

Shorter time periods for the regression increase the effect of labor share and decrease the effect from unemployment.

I am still reviewing these regressions. Monetary policy may have a place.

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