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US ECONOMY
CORPORATE PROFITS Axios ... Profit margins hit 72-year high 
Data: FactSet, Bureau of Economic Analysis; Chart: Axios Visuals The solution to the corporate profit crisis was to implement massive cost reductions first be relocating production from high wage unionized areas of the country to lower wage non-union 'right-to-work states and then by outsourcing production to low wage low cost countries outside the United States. Over time profits recovered, but the wages for most American workers has flatlined. Very few American workers are members of unions now in 2022 compared to pre-1980, and corporate profits have grown to record levels. Peter Burgess | ||
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3. 📈 Charted: Profit margins hit 72-year high
Corporate profit margins jumped to the highest level since 1950 in the second quarter, according to fresh government data released yesterday, Matt writes. Why it matters: While executives have bemoaned supply chain snarls, inflation and wage growth over the last year, profits have handily outpaced costs. State of play: The data, released by the Bureau of Economic Analysis, showed Q2 2022 was a remarkably good one for corporate America. Non-financial corporate profits — which strips out financial corporations whose profits can swing wildly based on markets — saw profits climb to an annualized pace of over $2 trillion. What we're watching: energy prices. Surging profits at oil companies — thanks to a rapid run-up in oil and gas prices this year — have been a major contributor to profit growth. 💠Matt's thought bubble: That suggests that keeping profits at this level could be tough. If rising gasoline, heating and electric bills become a long-term feature of the economy, it could eat into American consumer spending, which will, in turn, erode the profits of more consumer-facing companies. Case in point: Dollar Tree's shares were pummeled yesterday, after warning that inflation would likely pinch customers — and therefore, its sales — in the coming months.
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