Corporate profits are accounting for an increasing share of inflation. Our wages are being suppressed so rich shareholders can get richer.
Corporate profits are accounting for an increasing share of inflation. Our wages are being suppressed so rich shareholders can get richer.
In the past, corporate profit growth accounted for maybe a third of inflation. But a report from the Kansas City Fed found that nearly 60% of inflation in 2021 was because of corporate profits.
Did you read the article? The economist interviewed specifically said it isn't because of price gouging, but because they anticipated future costs will be higher than they actually were.
Normally, Andrew says, profits contribute less than a third to inflation. He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers. Andrew does not think this. He thinks companies likely raised prices not because their costs went up in 2021 - because they did not, really - but because they were anticipating that their costs would go up a lot in 2022. And by the way, costs did end up going up in 2022, although companies still made record profits.