Analysis of information sources in references of the Wikipedia article "2021–2023 inflation surge" in English language version.
Once dismissed as a fringe theory, the idea that corporate thirst for profits drives up inflation, aka 'greedflation,' is now being taken more seriously by economists, policymakers and the business press.
Many Democrats blame price-gouging companies for the worst surge in Americans' cost of living in more than a generation. But economists, including several who are left-leaning, disagree.
Some of the nation's largest retailers have been using soaring inflation rates as an excuse to raise prices and rake in billions of dollars in additional profit, a corporate watchdog group charged on Friday. ... The report highlights an ongoing debate about the causes of inflation, with some consumer advocates arguing that corporations are using inflation as a justification for passing on even higher price hikes to consumers. ... To be sure, inflation is rising sharply due to a number of underlying economic issues, such as supply-chain bottlenecks, labor shortages and strong demand from consumers.
According to quarterly reports for Tyson, the nation's largest meat processor, the company posted $3 billion in profit in 2021. ... Other major meat suppliers are also posting similar profits. Some analysts like Salvador believe the numbers don't add up. ... But what we see at the same time is that their profitability has been able to increase because the demand increases for their products have more than offset their cost increases. ... Salvador said there is nothing to keep the prices from increasing as long as "there isn't competition that will help drive down the prices so that they have a reason to actually be more reasonable."
Almost half of the increase in prices in the latest inflation numbers came from high energy costs, Yellen added.
Fed Chair Jerome Powell in testimony this week said a growing housing shortage is likely to result in continued housing inflation.
Consumers seem to be buying stories that seem to justify price increases, but which really serve as cover for profit margin expansion.
That different politicians, different parties, different policies and different rhetoric deployed in different countries have all met similar fortunes suggests that a large part of Tuesday's American result was locked in regardless of the messenger or the message. The wide variety of places and people who swung towards Trump also suggests an outcome that was more inevitable than contingent.
Meanwhile, COVID forced billions worldwide indoors, shifting demand away from concert tickets and restaurant meals and toward the exact goods in short supply. The Russia-Ukraine war has exacerbated the shortages and sent prices even higher.
From one presidential election to the next, more states usually swing toward the party that gains ground compared with how it performed four years earlier. However, it's rare for every state to move in the same direction, even in elections where one candidate wins decisively. ... But in 2024, all 50 states and D.C. swung to the right to varying degrees based on their margins versus the 2020 race. This marked the first presidential election since 1976 in which all 51 components of the Electoral College moved in the same direction relative to how they voted four years earlier.
Throughout the most recent U.S. spike in inflation in 2022, the energy category alone was responsible for around half of total inflation. And that's just counting the direct effects. Indirectly, a good portion of the food price increases ever since are also due to higher energy costs. If the farmer pays more to harvest the crop, soon those commodity prices increase as well. Of course, it isn't all fossil fuels...The IRA has not and will not cut inflation overnight. But that fight is indeed a big part of the bill's legacy: Play the long game of tackling all three types of climate-related inflation — fossilflation, climateflation, and greenflation — at their very core, and indeed justify the law's name.
As the Chart of the Week shows, the higher inflation so far mainly reflects higher profits and import prices, with profits accounting for 45 percent of price rises since the start of 2022. That's according to our new paper, which breaks down inflation, as measured by the consumption deflator, into labor costs, import costs, taxes, and profits. Import costs accounted for about 40 percent of inflation, while labor costs accounted for 25 percent. Taxes had a slightly deflationary impact.
The most recent CPI report shows year-over-year price index drops in 92 goods and services categories (among 338 measured).
Wolfers says companies are always trying to charge as much as they possibly can. In fact, the only reason we're not all paying $800 for a pair of socks or a cheeseburger is simply due to greed in another form: competition. ... "Inflation is coming from demand," says Wolfers. In spite of inflation, demand hasn't really blinked. Companies have been raising prices and we have been paying them. In fact, in many parts of the economy, spending has been rising right along with prices. ... And when our buying slows down, Wolfers says, companies will start lowering prices to entice us to buy: Prices will fall and inflation will ease. But, until demand drops, companies will push prices up as much as they can. It's elementary.
But inflation gives greedy, monopolistic companies a chance to take advantage, said Lindsay Owens, the executive director of the left-leaning Groundwork Collaborative. Profiteering "is an accelerant of price increases," she told me. "It is not the primary cause." ... More recent developments have also weakened the greedflation theory. Inflation has remained high ... But the stock market has plummeted; ... If the pursuit of profits were driving more inflation, you would not expect to see that.
When thinking about greedflation, it's helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn't decades ago? ... There is not much disagreement that many companies have marked up goods in excess of their own rising costs. ... When all prices are rising, consumers lose track of how much is reasonable to pay. ... But most of the public argument has been about whether companies with more market share have been affecting prices once goods are finished and delivered. And that's where many economists become skeptical, noting that if these increasingly powerful corporations had so much leverage, they would have used it before the pandemic.
A New York Times analysis of over 2,000 publicly traded companies outside the financial sector found that most of them increased sales faster than expenses, a remarkable feat when the cost of wages, raw materials and components was rising and supply chains were out of whack. As a result, profit margins, which measure how much money a business makes on each dollar of sales, rose well above the prepandemic average. On the whole, companies made an estimated $200 billion in additional operating profits last year because of that increase in margins.
"You have to look at the fiscal impulse from spending," Mr. Powell said on Wednesday, referring to a measure of how much tax and spending policies are adding or subtracting to economic growth. "Fiscal impulse is actually not what's driving inflation right now. It was at the beginning perhaps, but that's not the story right now." Instead, Mr. Powell — along with Mr. Biden and his advisers — says rapid price growth is primarily being driven by factors like snarled supply chains, an oil shock following Russia's invasion of Ukraine and a shift among American consumers from spending money on services like travel and dining out to goods like furniture. Mr. Powell has also said the low unemployment rate was playing a role: "Some part of the high inflation that we're experiencing is very likely related to an extremely tight labor market," he told a House committee earlier this month. ... Economists generally agree that those stimulus efforts — carried out by the Fed, by Mr. Biden and in trillions of dollars of pandemic spending signed by Mr. Trump in 2020 — helped push the inflation rate to its highest level in 40 years last year. But researchers disagree on how large that effect was, and over how to divide the blame between federal government stimulus and Fed stimulus.
Housing costs just posted one of their largest monthly gains in decades, and many economists expect them to loom large in inflation figures over the next year heading into the 2022 midterm elections. It's not just economists — the Federal Reserve Bank of New York said in research released Monday that Americans on average expect rents to rise 10.1 percent over the next year, the highest reading in the survey's history.
But when it comes to the single biggest driver of runaway prices, Washington's hands are mostly tied. Skyrocketing housing costs may create even bigger problems for the administration going forward than oil and food price spikes, which are the result of sudden and unforeseen — but probably temporary — events. That's because there's no clear end in sight for shelter inflation.
The International Monetary Fund said inflation had "continued to surprise on the upside" mainly due to rising commodity and shipping prices, continued mismatches in supply and demand, and shifting demand for more goods.
Four years after the pandemic, governing dysfunction is the story of almost every democracy on the planet, with few examples defying the trend. On nearly every continent, opposition movements have charged ahead in polls, unseated incumbents or lodged in-some-cases historic election gains against a global backdrop of inflation and agitation.
Andrew Bailey, the Bank of England governor, says he has no evidence that excessive profits are pushing up inflation beyond where it would be if companies simply passed on extra costs to consumers, ... Albert Edwards, a senior analyst at Société Générale, ... "Companies [have] under the cover of recent crises, pushed margins higher," he said in a note. "And, most surprisingly, they still continue to do so, even as their raw material costs fall away. Consumers are still 'tolerating' this 'excuseflation', possibly because excess [government] largesse has provided households with a buffer. ... Isabella Weber, an economist at the University of Massachusetts Amherst, has shown which kinds of companies are able to benefit from a crisis, giving academic support for what she considers a rational capitalist reaction to a crisis, one that allows them to make even bigger profits when consumers are primed to expect prices to rise in leaps and bounds.
Why are our electricity bills getting so expensive? Energy prices have been creeping up across the nation for over a decade. The latest consumer price index saw inflation dip below 3 percent for the first time since 2021, but inflation for electricity prices nationwide remains stubbornly high at 4.9 percent. There's no single reason why electricity keeps getting more expensive in any one place, however. The drivers behind rising energy costs are myriad, overlapping, and vexing. Inflation, rising energy demands, volatile natural gas prices, and extreme weather are all contributing factors...
At the same time, demand for food — particularly meat, nuts and fresh produce — has remained elevated, as Americans splurge on higher-quality specialty goods and organic items, according to Thilmany, of Colorado State University. Households are generally allocating more to groceries than they were before the pandemic, even after accounting for inflation, in part because their buying habits have changed, she said.
But inflation gives greedy, monopolistic companies a chance to take advantage, said Lindsay Owens, the executive director of the left-leaning Groundwork Collaborative. Profiteering "is an accelerant of price increases," she told me. "It is not the primary cause." ... More recent developments have also weakened the greedflation theory. Inflation has remained high ... But the stock market has plummeted; ... If the pursuit of profits were driving more inflation, you would not expect to see that.
Some of the nation's largest retailers have been using soaring inflation rates as an excuse to raise prices and rake in billions of dollars in additional profit, a corporate watchdog group charged on Friday. ... The report highlights an ongoing debate about the causes of inflation, with some consumer advocates arguing that corporations are using inflation as a justification for passing on even higher price hikes to consumers. ... To be sure, inflation is rising sharply due to a number of underlying economic issues, such as supply-chain bottlenecks, labor shortages and strong demand from consumers.
When thinking about greedflation, it's helpful to break it down into three questions: Are companies charging more than necessary to cover their rising costs? If so, is that enough to meaningfully accelerate inflation? And is all this happening because large companies have market power they didn't decades ago? ... There is not much disagreement that many companies have marked up goods in excess of their own rising costs. ... When all prices are rising, consumers lose track of how much is reasonable to pay. ... But most of the public argument has been about whether companies with more market share have been affecting prices once goods are finished and delivered. And that's where many economists become skeptical, noting that if these increasingly powerful corporations had so much leverage, they would have used it before the pandemic.
Almost half of the increase in prices in the latest inflation numbers came from high energy costs, Yellen added.
At the same time, demand for food — particularly meat, nuts and fresh produce — has remained elevated, as Americans splurge on higher-quality specialty goods and organic items, according to Thilmany, of Colorado State University. Households are generally allocating more to groceries than they were before the pandemic, even after accounting for inflation, in part because their buying habits have changed, she said.
Inflation has proved more stubborn than central banks bargained for when prices started surging two years ago. Now some economists think they know why: Businesses are using a rare opportunity to boost their profit margins...According to economists at the ECB, businesses have been padding their profits. That, they said, was a bigger factor in fuelling inflation during the second half of last year than rising wages were
There is broad consensus among economists that the role of profits in fueling inflation is one feature of the recent inflationary episode that made it different from the 1970s. Yet how much of a role profits played is the subject of controversy.
A few months ago, Wall Street rebuffed the idea that the Federal Reserve would be able to pull off a soft landing. Now, a growing crowd is betting on exactly that happening. Mutual funds and hedge funds managing roughly $4.8 trillion in assets have been putting money into stocks that stand to benefit from inflation cooling, interest rates going down, and the U.S. economy avoiding a recession, according to an analysis by Goldman Sachs Group Inc.
