Most American companies have enjoyed several years of bumper profits. But, as the results season gets under way, some big firms are reporting that times are getting tougher.

By most measures American companies should have it easy. The country’s economy is growing at a healthy pace—around 4% a year—and consumer spending is holding up. Although the Federal Reserve has pushed up interest rates and is set to increase them further, borrowing is still cheap. And a weak dollar makes America’s exports all the more alluring to buyers abroad, who currently account for almost a quarter of American firms’ profits. No wonder, then, that American companies’ profits as a share of GDP are close to an all-time record, or that the Dow Jones Industrial Average hovers around 10,500, over 40% higher than where it stood in late 2002.

As the reporting season gets under way, the news from many American companies is rosy. Bigger profits here, analysts’ expectations exceeded there. But for some firms business is less bright. These include eBay, which saw profits rise by 44% in the latest quarter compared with a year ago while failing to live up to expectations. Its shares plunged by 18%. Qualcomm, a mobile-phone technology firm, said that it would miss Wall Street’s forecasts, and Motorola’s shares fell by 7% after the mobile-phone manufacturer also admitted to performing less well than expected. Continental and Delta, two airlines, reported big losses in the fourth quarter. And General Motors said that profits in the same quarter had fallen by 37% compared with a year ago.

These results perhaps point to a wider truth: the days of vast and ever-growing profits may be coming to an end for the time being. In fact, according to figures from the Bureau of Economic Analysis, overall profits for all businesses decreased by $55.9 billion in the third quarter, a 4.8% drop compared with the previous quarter. For non-financial firms things look better: profits have soared since 2001 and are still growing. But that growth began to slow in the second half of last year.

The specific travails of individual companies offer only a partial explanation for the slew of disappointing earnings news in recent days. More generally, the high oil price has hit profits and may also contribute to slowing economic growth and hence further depress earnings. Other corporate costs have also escalated. For example, America’s car companies have had to endure big rises in steel prices.

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