Finance NewsOther Finance

What Happens if Corporate Profit Margins Start to Decline?

Factors that support sustained high margins are slated to reverse

Before 2018 drew to a close, those analysts not mesmerized by the steady and considerable rate of profit margin growth were already adjusting their first-quarter and annual 2019 margin projections downward. After record-setting increases in 2018, several factors will coalesce to break the favorable decade-long trend that has supported historically high margin levels.

Some of these factors are already working their way to the corporate bottom line, crimping profits. Unprecedented low unemployment has increased the bargaining power of employees — this is despite the long-term decrease in the number of employees that are union members. The past several years have seen wages rise on a percentage basis that is the highest in 30 years. According to the U.S. Labor Department, average hourly wages in February were 3.4% higher

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