The Economy: Where the Blame Lies

One of the gnawing preoccupations of U.S. businessmen is the profits squeeze.

Since 1948, profits before taxes have declined from 21.3% of the value of total U.S. corporate production to this year's 15.7%. What is to blame? Last week, in its monthly Survey of Current Business, the Commerce Department suggested some answers.

On the Commerce slide rule, the squeeze does not seem to come from the most commonly blamed factor: rising wages. Proportionately, U.S. labor costs today are exactly what they were in 1948—64% of the value of total corporate output. The trouble comes largely from two other factors, according to the...

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