US News Half of recent US inflation due to high corporate profits, report finds

[tom_mai78101]

A new report claims “resounding evidence” shows that high corporate profits are a main driver of ongoing inflation, and companies continue to keep prices high even as their inflationary costs drop.

The report, compiled by the progressive Groundwork Collaborative thinktank, found corporate profits accounted for about 53% of inflation during last year’s second and third quarters. Profits drove just 11% of price growth in the 40 years prior to the pandemic, according to the report.

Prices for consumers rose by 3.4% over the past year, but input costs for producers increased by just 1%, according to the authors’ calculations which were based on data from the Bureau of Economic Analysis and National Income and Products Accounts.

“Costs have come down substantially, and while corporations were quick to pass on their increased costs to consumers, they are surprisingly less quick to pass on their savings to consumers,” Liz Pancotti, a Groundwork strategic advisor and paper co-author, told the Guardian.

Since pandemic inflation spiked in 2021, a high-stakes debate has played out about its sources. Many progressive economists pointed to corporate profits – or “greedflation” – and supply chain issues as a driver of high prices, while their more conservative counterparts singled out government stimulus cash and high wages.

Half of recent US inflation due to high corporate profits, report finds

Thinktank report says ‘resounding evidence’ shows companies continue to keep prices high even as their inflationary costs drop

www.theguardian.com

 

[Old Mountain Shadow]

Inflation is created by the debasement of a currency ie printing or fractional reserve banking, not by corporations or citizens.

 

[tom_mai78101]

Inflation is created by the debasement of a currency ie printing or fractional reserve banking, not by corporations or citizens.

Inflation can also be caused through open market operations, which is what this report is about. https://en.wikipedia.org/wiki/Open_market_operation

 

[jonas]

Inflation is created by the debasement of a currency ie printing or fractional reserve banking, not by corporations or citizens.

Say you and me both want to sell an apple, and tom wants to buy an apple for 50ct.
You offer yours to tom for 50ct, but I iffer mine for 45ct. Then you lower your price to 40ct, and tom buys your apple for 40ct.

Now if I break into my neighbor's apartment and the police arrests me, I can't sell tom my apple anymore.

So there's no reason for you to lower the price of your apple anymore. Tom has to buy the only apple that's left, yours, for 50ct. It's the same goddamn apple from the same person, 25% more expensive.

The banks didn’t print or fractionalize money. Tom doesn't have more money than before. The price still went up.

We call that inflation.

Now the fed tries to prevent the inflation. What can they do? They can prevent tom from getting 50ct by making his employer not able to pay as much salary. How? By making the employer pay more for the borrowed money they have, taking that additional interest right out of the budget for paychecks, dividends etc.

That's what the feds are trying to do now. Trying to balance somewhere between fucking up the economy by making money so expensive that companies crash and burn, and having inflation propagate in a feedback loop through the system, also fucking up the economy.