US firms post 19.4% Q2 profit margins, highest since 1940s
US companies hit their highest profit margins since the 1940s, reaching 19.4% in the second quarter (up from 18.2% last quarter), with overall profits jumping nearly 10%.
This surge came as businesses managed to pass rising costs onto customers while people kept spending, even with higher prices and slow wage growth.
Nonresidential fixed investment up 8.5% annualized
With more profits rolling in, companies boosted investments in things like equipment and intellectual property.
Nonresidential fixed investment grew at an annualized rate of 8.5% last quarter.
As economist Richard Moody, chief economist at Regions Financial Corp. put it, "healthy profit growth is freeing up cash that is, in turn, helping support business capital spending, with cap-ex growth extending beyond AI related investment."
These record margins show how US businesses are staying strong despite inflation.