PROFITS SURGED 35% last year, according to data published on Wednesday by the Commerce Department, driven by strong household demand, which was underwritten by government cash transfers during the pandemic. In all four quarters of the year, the overall profit margin stayed above 13%, a level reached in just one other three-month period during the past 70 years.
It was a solid year for workers, too – just not in comparison to shareholders. Employee compensation rose 11%, but the so-called labor share of national income – essentially, the portion that's paid out as wages and salaries – fell back to pre-pandemic levels. That tends to undermine the argument that soaring labor costs are what's driving the current surge in inflation, a case the Federal Reserve is starting to make as it accelerates interest-rate increases.