Must Profit Margins Return to the Mean?
There are a few reason margins could stay higher today than the historical average, says Morningstar's Pat Dorsey.
Pat Dorsey: Hi, I'm Pat Dorsey, director of equity research at Morningstar.
One of the big picture issues that you'll often see talked about is that profit margins in United States are at a cyclical peak. They are at an all-time high, and because they are very likely to regress to a long-run mean, well, that's going to be a big headwind for earnings growth as margins come down and companies have a more difficult time generating earnings growth because revenue growth will probably slow down as well.