As U.S. corporate profit margins soar to their highest levels since the period immediately following World War II, the debate over "excess profits"—a concern first raised by the Harry Truman administration some 80 years ago—is being reignited.

Bloomberg reported on June 25 (local time) that an analysis of data from the U.S. Bureau of Economic Analysis (BEA) shows the annual profit margin for non-financial corporations, calculated by dividing after-tax profits by gross value added, is currently at approximately 15%, the highest level since the late 1940s.

This figure significantly exceeds the 13–14% seen during the Truman era in the early 1950s and the 10–11% recorded in the 2010s.

This metric serves as a structural indicator of profitability, showing how much of the value generated through economic activity is actually retained as profit by corporations.

This analysis draws attention in conjunction with the final estimate of first-quarter real Gross Domestic Product (GDP) growth released by the U.S. Department of Commerce on the same day.

The final growth rate for the first quarter was 2.1% (annualized rate from the previous quarter), an upward revision of 0.5 percentage points from the preliminary estimate of 1.6%.

Private-sector corporate profits in the first quarter increased by $74.4 billion from the previous quarter.

This figure is $34 billion higher than the preliminary estimate.

While private-sector corporate profit is a different concept from "profit margin," it aligns with the context that corporate profit expansion is currently ongoing.

Bloomberg recalled that the "1948 Economic Report of the President" warned that the ratio of corporate profits to private-sector national income, which reached 9.4%, was "dangerously close to the danger level (10.2%) of 1929, just before the Great Depression," noting that current profit margins have already surpassed that level.

In fact, Micron reported a gross profit margin of 84.9% in its fiscal third quarter (March–May) results announced the previous day, surpassing Nvidia (75%) and Meta Platforms (81.9%).

The problem lies in the inflationary pressure lurking behind this strong profitability.

The Personal Consumption Expenditures (PCE) price index for May rose 4.6% compared to the same month last year.

The core PCE price index, which excludes volatile food and energy prices, rose 3.4% compared to the same month last year.

This is well above the Federal Reserve's 2% target.

With growth and profits remaining strong while inflation remains stubborn, the monetary policy dilemma facing new Federal Reserve Chair Kevin Warsh is deepening.

Bloomberg pointed out that while extreme profit levels were also recorded in the late 1940s without leading to a catastrophe like the Great Depression, the anxiety felt by advisers in the Truman administration is worth reflecting on today.

(Photo: Bloomberg screen capture, Yonhap News)