Reuters Reports that US companies have strong profit margins for 2 reasons: 1. cost cutting, and 2. passing high prices along to customers ( definition of inflation: a general increase in prices and fall in the purchasing value of money). “Companies are doing a great job of managing costs in a difficult environment,” he said, and that’s led to “really robust profit margins.”
Question: What evidence of cost cutting and the great job of managing cost does Reuters provide to support their assertions? The higher prices being passed on I can see, the alleged cost cutting, not so much.
NEW YORK, Sept 22 (Reuters) – U.S. companies have retained strong profit margins through the pandemic because they have cut costs and passed along high prices to customers.
Government numbers, which aren’t adjusted for inflation, were updated on Dec. 22. They show that corporate profits in the quarter ending Sept. 30 tallied $2.7 trillion dollars, the highest level since 1950. Corporate profits in the previous quarter also reached a high as a percentage of gross domestic product.sts and passed along high prices to customers. The question is: How long can this go on?
Corporate profits is one of the most closely watched U.S. economic indicators. Profitability provides a summary measure of corporate financial health and thus serves as an essential indicator of economic performance. Profits are a source of retained earnings, providing much of the funding for capital investments that raise productive capacity. The estimates of profits and of related measures may also be used to evaluate the effects on corporations of changes in policy or in economic conditions.