Business: More Punch in Productivity?

Aid now for some good news about U.S. industry's competitive strength. In the third quarter of this year, according to a poll of 548 large companies by the Wall Street Journal, average aftertax profits were up by 21%, compared with the same period last year. Airlines and the steel industry posted big increases; General Motors' net income rose by 31% to $528 million, its highest quarterly earnings ever.

Corporate belt tightening, price increases and the continued buoyancy of the economy all helped to increase profits. Kemble Stokes, a Commerce Department senior economist, adds another, more intriguing reason. During the third quarter, the...