14 AUGUST 2025
The chart below shows US corporate profits as a percentage of GDP in the period since World War II.
Whilst there has been significant variation over time, the current level of profitability is already high at around 13%. Of course, margins may improve even further from here, but what the chart tells you is that a lot is already expected from the AI productivity miracle.
Maybe companies will be able to do more with fewer expensive workers. However, how likely is a further margin expansion with Governments looking to plug their gaping deficits with higher tax takes from both companies and individuals, wages generally on the rise, and de-globalisation/protectionism/on-shoring all gathering pace? Moreover, how sustainable is any margin expansion likely to be?
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