Actual and foreseeable trends in corporate profit margins
The trend in corporate profit margins can be measured by the trend in the ratio between the GDP deflator and unit labour costs. We then see that today: In the United States, profit margins are significantly higher than before COVID; In the euro zone, profit margins are slightly lower than before COVID. The outlook for 2023 is a decline in profit margins, due to: The slowdown in growth; Faster wage growth than in 2022.