Corpos are slowing down the gouging..
this post was submitted on 12 Jul 2023
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There's a term for that: greedflation. When a company raises their prices to improve their margins then blames the increase on inflation.
They tend to do that when people stop buying all the stupid extra shit.
Inflation generally begins with suppliers, so unless you consider truckers, farmers, miners, etc "corpos" your take is way off base.
Today's inflation is a direct result of the pandemic, exacerbated through savings/loose credit/"free" money as a result of not being able to spend during the pandemic. Demand didn't disappear, it just got built up. Meanwhile, manufacturers, shippers, and receivers literally couldn't get staff, and their costs rose. This carried all the way down the chain
The common retort here is the "record profits" line, but like... Yeah. Demand built up for TWO YEARS. Everyone and their mom is hiring. Of course they're seeing record profits.
Gouging has nothing to do with it. Unless you're talking about crude oil prices then yeah it's a lot of gouging, lol. Monopoly on supply and all that. But again, those costs trickle out through the entire economy.
My salary didn't increase enough to match inflation but the amount we charge our customers at my job did. Oh and my clients are all government or large manufacturing outfits. Not like malls or something.
Nothing to see here, right?
If every person's salary increased to match I flation we would enter a wage hike spiral where wages go up, inflation rises, wages go up, inflation rises, etc
You can't fix anything, you should just accept that life is shit, and all the things that I said were bad ideas are great ideas for the super rich.
-every time economists talk.
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Uh, yes to all 3.
Only 9% of truckers are owner operators. 91% work for companies, the vast majority of which work for large companies like SWIFT, or major retailers like Walmart.
The vast majority of miners work for large corporations too.
A majority of farmland is owned by mid-large sized corps too.
So truckers, farmers, and miners themselves might not be corpos, but they’re labor for a capitalist just like most everyone else. And those capitalist owners are looking to extract the maximum profit possible.
You don't seem to understand that most trucking companies, by a VERY large margins, are not large fleets. I worked in that industry for a decade.
Your hate of capitalism is nonsensical.
I don't hate capitalism anymore than I hate natural gas. I would rather cook with it instead of inhaling it.
It has its uses and limitations.
Gouging is roughly half of the reason for the hough inflation. Even industries that saw no shortages raised their prices because they saw they could because people expected higher prices. There have been a few econ papers written on the subject. Initially the additional profit margins were not looked at much because generally that is not the cause of inflation. But it can be. The last time it was a significant source of inflation was after WWII when people expected higher prices because factories had to completely switch what they were producing back to commercial good.
Can you link those papers?
Here is one of them:
That study shows the opposite of what you're claiming.
Sorry about that. I'm traveling and only on mobile. I had heard it on Planet Money and assumed they would link it and they apparently linked a very short paper that does not show it.
Here is a paper from the Kansas City Fed that shows increased profit margins made up over 50% of the price increases:
The EPI also wrote on it but they are left biased so I would put a little less stock in it:
Not to mention, "record profits" is exactly what you would expect in absolute numbers in an inflationary environment. If all of a company's costs double, and they subsequently double all prices, then they'll get "record profits", despite nothing meaningful having changed.
Individual workers are also making "record" amounts of income, but again, that number in isolation isn't meaningful at all. I have significantly more dollars than a 1700s NYC landlord. I'd still much rather have his relative financial situation.
That’s not how net profit works. Net profit takes into account the cost of goods, if cost of goods, doubles, and gross profit doubles, net profit hasn’t changed at all. These companies are taking advantage of the fact that cost of goods (including shipping) have gone up to massively crank up prices, hence record net profits.
Corporate profit margins hit a 70 year peak in 2022 despite plenty of supply turbulence in the highest inflation since the 1980s.
Yes, it is.
Expenses: $500
Revenue: $1000
Net profit: $500
Now, say we've had runaway inflation, and the dollar is suddenly worth half as much.
Expenses: $1000
Revenue: $2000
Net profit: $1000
You might thing, "hey, that's $500 more dollars!" Yes, but these dollars have half the value as they did in the previous scenario, so you have the same amount of actual value as before the inflation, even though the absolute number is higher and thus you've broken records. Profit margin is a much more useful metric to look at, and that is unchanged in this example.
Now, as I understand, there are some industries where profit margins have noticeably increased, and there are interesting questions that can be asked there. But profits going up simply isn't a very interesting thing. Profits remaining static is actively a bad thing, because again, inflation is a thing. To flip this around, a worker never getting a raise in 20 years is obviously not doing very well. Workers need regular raises just to keep up with inflation. The exact same thing is true for businesses as well.
It's actually record profit margins, not just record profits. Even industries that were not affected by shortages raised their prices and there was an increase in profit margins almost across the board.
For sure, and I'm very much not saying that businesses are blameless or haven't exploited the situation. I'd just vastly prefer reporting to talk about the metrics that actually matter, like profit margins, rather than essentially meaningless ones like net profit than do nothing more than push an obvious underlying agenda.
From data I could find, you see a very sharp dip in margins during 2020, a significant rise in 2021-2022, and in 2023, things have largely returned to pre-pandemic numbers. I won't pretend to be an economist, but if we're going to be claiming uniquely bad corporate malfeasance, I want strong evidence showing that, not essentially meaningless fluff like "numbers go up in a highly inflationary environment".
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most of my costs have been flat or going down the past six months. a lot of consumer goods that I buy are seeing massive price cuts due to overstock and plummeting demand after two years of being at or above MSRP.
Things that are still increasing are service industry stuff. Restaurants, haircuts, travel, etc all seem to be going up. I have basically given most of that stuff up because there I see no reason to spend $50 on a haircut, or a hamburger and a two beers. When I flew in 2020 a ticket was like $400, that same flight today is like $1200.
local vacation rentals also seem to be plummeting in cost thank to massive vacancies because people can travel internationally again. I've also started to see cars prices go for MSRP or mild discounts in my area after two years of them being 20% over MSRP. I'm looking to replace my 7 year old car in the next year or two, and most models of it are already seeing $1000-2000 discounts, I'm hoping by winter that will go up to $3000-4000.
In which country?
The article cites the U.S. consumer price index and the U.S. Bureau of Labor Statistics, so I'd say U.S.
They are talking about the USA.
"Turkey_titty_city" as the name leaves open some options lol
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Dont forget they have changed the way this is calculated two times in the last 2 years this is now completely bullshit.
That’s not true, nor would a marginal adjustment in how each item is weighted change the final number significantly. We’re talking about a few basis points. Numbers below the significant figures on the headlines.
When do they change the weighting they do it to more accurately reflect consumer spending, because consumer spending changes quite a bit from time to time.
The line about CPI being manipulated is repeated over and over, without sourcing, on the internet, every time inflation numbers are released.
Internet doomers aren’t smarter than the highly qualified statistics experts at BLS.
It should also be noted that the items in this report with the highest level inflation are outliers, and are discretionary items such as air travel, hotels, luxury items, and home improvement materials. So if anything the inflation rate is lower for essentials focused spending, middle and lower class families who are paying rent, basic utilities, and simply trying to put food on the table.
It's been changed 7 times since 78
Most recently these were the changes, very well documented. Nothing sounds suspicious
Changes to the CPI establishment frame (2019-2020) Replaced Telephone Point-of-Purchase Survey (TPOPS) as source of retail establishment frame with data from the Consumer Expenditure Surveys (CE) Eliminated redundancies and inefficiencies in survey operations and reduced household burden Use of Quarterly Census of Employment and Wages business registry to refine the location and address data from the CE For more on the history of the CPI and price change in the U.S see
https://www.bls.gov/cpi/additional-resources/historical-changes.htm
I just read that link. I appreciate the information. I have read a one or two articles regarding it. Nice to see it straight from the source. And ya, it’s the opposite of suspicious. It’s exceedingly reasonable minute adjustments spread over long periods of time. The opposite of what I keep reading on every thread in certain circles.
The only changes in the last 5 years (none in the last two years) were:
_ •Replaced Telephone Point-of-Purchase Survey (TPOPS) as source of retail establishment frame with data from the Consumer Expenditure Surveys (CE)
•Eliminated redundancies and inefficiencies in survey operations and reduced household burden
•Use of Quarterly Census of Employment and Wages business registry to refine the location and address data from the CE
I can’t even try to spin that as a way to manipulate the data if you paid me to take Alex Jones spot at infowars.
Superstonk baggage handlers, crypto bros, doomers etc have their own foundations in reality based on things they read without fact checking.
Home improvement materials are discretionary? Tell me exactly what items that includes. It better be something like a gazebo but I bet it's stuff like hot water heaters and window glass.
To renters yes. Most home improvements are infact non essential. Eg kitchen remodels. Ask your contractor who’s doing most the kitchen remodels and home improvements in general. It’s upper middle class to wealthy. Not people struggling to buy eggs. And the reason these improvements are being done is because everyone with real estate refinanced at 2.5% and got free money from the fed.
I should know, I’m one of them.
Doubt.
Sucks to be uninformed
Go to a working class neighborhood and tell me it looks like everything is new and recently improved. Lol.
It sucks that you can't produce a list so you went with an anecdote about mortgages when the question was asked what consists of discretionary.
Want to attack the idea or the person asking again?
Go to a poor neighborhood and tell me about all the nice new home improvements you see. Haha. You’re playing dumb or bingeing sincere about it.
Also it’s not anecdotal. The majority home owners refinanced under 4%. That’s massive amount of money that is not tied up for people who can afford to buy homes. And now can afford that new kitchen.
Replacing a broken toilet is $150. Remodeling large kitchen is 70,000+.
How is that list coming?
Source?
Are you talking about CPI and PPI?
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