Post-Pandemic Corporate Profits Outpace New Investment, Study Finds

A new study has found that corporate profits have grown faster than business investment in the post-Covid period. Researchers found that while companies are earning strong returns from existing assets, this has not translated into increased capital expenditure. The study identified that initial returns on new fixed-asset investments have weakened since the pandemic, dampening what economists call 'marginal profitability'. This divergence between overall profitability and the attractiveness of fresh investment helps explain why businesses have been reluctant to expand their asset base despite healthy balance sheets.