With earnings season in full swing, bulls and bears are combing through reports to arm themselves in what's become the mother of all stock market debates: Does the recovery gain steam, sending shares aloft? Or does it remain sluggish, or even stall, and push them down further?

A third possibility: Maybe the economy doesn't matter so much.

Larry Hatheway, an economist at UBS, says economic growth means companies selling more things. But he thinks that is not as important as it used to be to generating the profits needed to send stocks higher. That's because U.S. firms have mastered the art of pulling more and more money from each dollar of sales.

One gauge of that success: Corporate margins, or profits per sale, are hovering near 12 percent now, by one measure — tantalizingly close to a half-century high.

"As long as we don't fall into another recession, it's a good time to make money," says Hatheway, who's bullish on stocks. "We're able to squeeze more profits out of sales than we were twenty or thirty years ago."

Though just a third of companies in the Standard & Poor's 500 have reported quarterly earnings results so far, the picture is impressive. Profits are booming. Eight out of ten companies have beat earnings expectations, according to Thomson Reuters. The average jump in profits is 33 percent.

It's an old story, really. Companies cut workers in a downturn, and squeeze more out of those remaining. And so profitability rises smartly — only to fall again in the recovery as sales and payrolls rise once more.

But Hatheway says margins will stay high for a while yet because the forces that pushed them there aren't going away anytime soon.

He says high unemployment is likely to stick around longer than in typical recoveries. And while that's bad for the economy, it's good for margins. "Firms can pick good employees and dictate compensation," he says.

U.S. companies also have learned to squeeze more from their equipment and factories, not just their workers, he says. They kept their spending on such things low even before the recession. They feared a repeat of the booming 1990s when they spent wildly on equipment like telecommunications gear — only to discover they didn't need all of it.

Hatheway says globalization has helped, too. Companies outsource much work abroad and draw supplies from numerous sources now as trade has boomed, which helps keep costs down. Growth abroad has boosted exports, too. That makes the fate of U.S. profits, and margins, less tied to U.S. growth.

The result: Though profit margins will rise and fall as they always have done, the highs and the lows are higher, Hatheway says. He defines margins as total U.S. corporate profit divided by the country's gross domestic product.

"I see lows now of maybe 9 percent," he says, a point or two higher than margins during most of the 70s and 80s. He adds that falling margins are "far in the future" — perhaps four years away.

Not everyone is convinced.

Legendary investor Jeremy Grantham, the Boston money manager who called the housing bust years ago, has been telling investors for months now that profit margins will fall from their perch, sending stocks tumbling. Andrew Smithers of London researcher Smithers & Co. wrote a report warning of the same. John Hussman of the Hussman Funds wrote this month that investors buying stocks on the belief that fat margins will last are destined to "walk themselves over a cliff."

"The dark side of margins is that they're going to have to come down," says Claus Vistesen, an economist at the University of Hull in England. He adds, ominously, "And the market hasn't fully priced this."

Hatheway, for his part, isn't backing down.

"If you give me slow growth and high unemployment, I can give you high earnings," he says. "The stock market is not the economy."