We've looked at the astounding level of corporate profitability a couple times, links below.
If we get a margin squeeze and throw in a dollop of PE multiple compression we will have the quintessence of a secular bear market.
From Pragmatic Capitalism:
Good news can in some ways be self defeating. Unfortunately for the millions of unemployed in the United States the global recovery has been accompanied by surging input costs. With weak end demand these costs are being largely eaten by corporations. Thus far margin expansion has been the key factor in the profit rebound. With troughing unit labor costs and rising input costs we’re likely to begin seeing margin compression as we head into 2011. With meager revenue growth that’s not necessarily a net negative, but it will create a continuing defensive position for corporations and likely result in a tepid hiring process. S&P elaborates on the margin compression of 2011...MORENov. 20
Update to "President Obama Has Been Very Good for Business
President Obama Has Been Very Good For Corporate America