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high corporate profits are/were a (main) driver of ongoing inflation

Summary:
It appears like someone is waking up to a reality. When they can, corporations will take advantage of an economic event to increase margins resulting in increasing profits. They will call up and say they are increasing prices, take it or leave it. When your customer is one of the big three, you take it. And, you will not be able to pass along the pricing increase. One scenario, I experienced. Prices are simply the sum of costs and corporate profits. While rising costs of inputs can drive up what Americans pay at the gas pump or the grocery store, corporate profits can just as easily. GWC Corporate Profits Report, ground work collaborative, Liz Pancotti and Lindsay Owens Another scenario is the backed-up container ships on the West Coast.

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It appears like someone is waking up to a reality. When they can, corporations will take advantage of an economic event to increase margins resulting in increasing profits. They will call up and say they are increasing prices, take it or leave it. When your customer is one of the big three, you take it. And, you will not be able to pass along the pricing increase. One scenario, I experienced.

Prices are simply the sum of costs and corporate profits. While rising costs of inputs can drive up what Americans pay at the gas pump or the grocery store, corporate profits can just as easily.

GWC Corporate Profits Report, ground work collaborative, Liz Pancotti and Lindsay Owens

Another scenario is the backed-up container ships on the West Coast. Once on shore, there were not enough chassis to move containers by truck. Biden ordered them to work OT to clear up the mess..

My experience has been, it is more than just firms profit taking when supplies are low. There is of course startup costs. It does not take that long to get up to compacity. The one part is profit-taking and another is contrived shortages. With Semiconductors you grow the wafers first and then they are sent to packaging where they are assembled. The latter part of it being automated with a few people in the “bunny-uniforms to minimize contamination. Is there a reason for gross shortages. Probably not.

Economist Isabella Weber has pointed out that corporations are keeping prices high even as post-pandemic and Ukraine War supply chain pressures ease and wage growth slows.

Why? Because they can.

Weber argues that supply shocks allowed corporations to tacitly collude, hike prices, and rake in record profits. This type of inflation, where corporations raise prices to protect and even increase their profit margins, allows prices to rise faster than the costs to make goods or provide services. When corporations pursued this opportunistic pricing strategy, they found a lot of space to increase prices, drive up profits, and see very little drop-off in demand.

GWC Corporate Profits Report, ground work collaborative, Liz Pancotti and Lindsay Owens

I have seen this in 2008 and now again saw it in 2021-2023. Pricing is still high in many cases. Food being one of them. Food being one of them. Why is it gasoline price has suddenly improved when it was said high prices would remain? My own thoughts are with the process involved in making gasoline. It is a process and is not as granular as food products or diapers are. It does not mean pricing will not increase later.

Industry is controlling the supply chain to drive prices the same as they are controlling margins. For some margins, it will be a bit before you see those commodities lessen in price like gasoline did. Simple piece, talked in generalities, and letting you know what this supply chain guy is seeing. Maybe rjs will chime in on oil. New Eal democrat usually posts on prices and cost also.

GWC Corporate Profits Report, ground work collaborative, Liz Pancotti and Lindsay Owens.

‘Greedflation’: A once fringe theory of inflation gains momentum, On Point, wbur.org, Hilary McQuilkin and Meghna Chakrabarti

Half of recent US inflation due to high corporate profits, report finds, Inflation, The Guardian, Tom Perkins

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