NEWS AND COMMENTARY
May 26, 2000
Bottom Line Seen Tightening As Inflation Pressures Rise
(excerpted) By Yochi J. Dreazen, The Wall Street Journal
This is Just the Beginning...Weiss comments
WASHINGTON -- Growth in corporate profits slowed in the first months of the year, while profit margins improved only slightly, suggesting that the bottom line at many firms may begin to suffer in the months ahead.
In its first look at first-quarter corporate results, the Commerce Department said that profits, adjusted for the impact of inflation on inventories and depreciation, rose 3.8%, slightly slower than the 4% gain recorded in the last months of 1999. Profits were 7.6% higher than they were a year earlier, down from a 9.6% year-over-year change in the fourth quarter of last year. Profit margins, meanwhile, inched up 0.1% to 9.8% for the quarter, but have been relatively flat for the past two years.
"The peak rate of profit growth is behind us," said David Orr, chief economist with First Union Bank Corp. in Charlotte, N.C. "There will still be growth, but at a decelerating rate."