It's not just the potential actions of the Federal Reserve that should worry investors, according to former Goldman Sachs economist Gavyn Davies, writing in the Financial Times. "The fundamental earning capacity of corporate America" is about to be "found wanting".
Take a look at the annual contribution that company profits make to GDP (broadly, a measure of national wealth) over the last century and you will find that it fluctuates around a pretty constant average. However, in recent years corporate profits as a share of GDP have risen sharply "above previous peaks". Why? Because at the same time the share of GDP accounted for by wages has been falling to "unprecedented depths".
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