Originally published at Financial Times | May 1, 2013
The first-quarter earnings season is well under way and the S&P 500 has hit a record high. US companies are earning more per dollar of sales than at any time in history, and total corporate profits stand at around 13 per cent of GDP, the highest on record.
Chief executives have reason to feel smug, but cannot be complacent, and now face a fork in the road. To earn their pay from here, they will be forced to invest. The alternative, sitting on piles of cash, is one that ultimately leads to uncompetitive businesses with sinking profitability.