The Divergence Between Corporate Profits And GDP Growth Is Totally Unsustainable

I would further ask how much of that corporate profit comes from banking and finance as opposed to manufacturing

Business Insider

31 August, 2011

The U.S. is seeing its weakest economic recovery and strongest profit cycles in the post-war period. But at some point these trends have to converge through faster revenue or wage growth, according to Societe Generale analyst Aneta Markowska: 

"Typically at this stage of the cycle, cost cutting gives way to an acceleration in employment gains. Margins contract, but consumer demand rises and the impact on the bottom line is cushioned by faster revenue growth. In this cycle, it is not obvious that this normal mechanism will catch on. If it does not, the cycle is at risk of being choked.

...With nominal GDP growth expected to average around 3.7% in the next two years… this means that profit growth is likely to settle down in low single digits. Any margin contraction – even a modest one – could push non-financial profits into negative territory."

Here's a chart that shows the trajectory of GDP and profit growth: