Does profit lead investment?

Roberts's argument against demand-led readings of slumps: firms invest out of realised profit, so profit growth should lead investment growth, not follow it. This page correlates the two series' year-on-year growth at a range of lags and reports where the strongest correlation actually falls.

corr(Δ%profit, Δ%investment shifted by lag)  ·  positive lag = profit growth predicts investment growth that many years later

In plain terms: take how much profit grew each year, and how much investment grew each year. Slide the investment series backward and forward in time relative to profit and see which offset makes the two move together most closely. If profit really leads investment, the strongest match should show up at a positive lag — this year's profit growth matching next year's (or the year after's) investment growth. Profit is non-financial corporate profit (BEA); investment is whole-economy nonresidential fixed investment (BEA) — a sector mismatch, but the standard one, since corporate profit dominates the aggregate and housing investment answers to different drivers entirely.