U.S. Companies Will See Profits Increase In Remainder of 2011

Bloomberg reports that profits at American companies are poised to be one of the few bright spots in the U.S. economy, helping to steady the faltering recovery.

Earnings will climb an average 10% a year through 2013, more than three times quicker than the economy, after what has already been the fastest rebound since the late 1940s, JPMorgan Chase & Co. projects.

Surging overseas sales, improving U.S. demand and the Federal Reserve’s pledge to keep interest rates close to zero for an extended period, bode well for earnings, said Robert Mellman, an economist at JPMorgan who has tracked corporate profits since 1985 and recently published a special report on the subject. Widening margins will give businesses the means and incentive to invest and hire, paving the way for accelerating growth in the world’s largest economy, he predicted.

“Corporate profits have plenty of room to run, as returns on investing and expanding are high,” Mellman said in a recent interview. “This makes companies want to grow the business. As profitability remains strong, they’ll increase hiring.” ◆