U.S. Corporate Profit Margins - Highest Ever !
Source: NIPA, Flow of Funds, GMO
As of 9/30/2011
What Goes Up Must Come Down!
"Today I find myself once again digging through this toolkit, searching for a way to understand the development of profit margins. Currently, U.S. profit margins are at record highs according to the NIPA data. More freakish still is that these record high profit margins are coming during the weakest economic recovery in post-war history."
"When we look at the drivers of today’s high profit margins, we find fiscal deficits behind the high profit margins of many countries. There is nothing “wrong” with this per se, but it does suggest that moves toward fiscal retrenchment will bring margins back toward more normal levels. It seems unlikely that “this time is different” when it comes to mean reversion in margins: what goes up must come down."