Why Corporate Profit Margins Are About to Contract
Source: NYT > Business
U.S. companies engineered margin expansion through price increases, labor cost suppression, and operational efficiency—but weakening consumer demand, returning wage pressure, and competitive intensity in key sectors are closing that window. The disagreement among economists isn't whether margins compress, but how fast: some point to consumers hitting debt ceilings and cutting discretionary spending, others to unionization gains and labor scarcity forcing wage concessions that companies can't pass through to price-sensitive buyers. For retailers and consumer goods makers, the era of raising prices faster than costs is ending. The next cycle of earnings growth either comes from genuine volume gains or doesn't come at all.