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Explaining The US Economy’s ‘Since 1947’ Moment
In what I'd be inclined to call another blow to constructive takes on the outlook for the world's la
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S&P 500 net profit margins have been on an upward trend line for at least the past 30 years. Record net profit margins (reaching just above 13% or so) were achieved in 2021. But over the last couple of quarters, net profit margins have started to decline (just a little so far). I read somewhere recently that during historical periods of high inflation, profit margins have gotten squeezed/get reduced… I may be off but I recall they’ve historically been reduced by up to about half. If this dynamic starts to repeat, the US stock market may be in for a rough ride (with the current historically high profit margins AND historically high valuation multiples)
The phone rings.
Jay answers.
The creepy voice asks: “Why haven’t you checked the Unit Labor Costs…?”