A new report from a progressive think tank argues that Americans’ recent inflation woes were driven by companies that kept their prices high even as costs have come down in recent months, in order to increase their profit margins.
The Groundwork Collaborative’s report, first reported by The Guardian, says that corporate profits are behind 53% of inflation over the second and third quarters of 2023.
At the height of the COVID-19 pandemic, the report’s authors noted, “virtually every company in every industry faced rising costs to make products and stock shelves.” The Ukraine war also worsened energy costs and hit supply chains.
But as these production strains have eased, the report said, companies across the economy have opted against lowering prices for consumers.
“What we saw over and over again, listening to the earnings calls and when we looked at the macroeconomic data, is that companies were passing along their higher prices and they were going for more,” Lindsay Owens, executive director of the Groundwork Collaborative, told MSNBC’s Ari Melber. She said companies are taking advantage of customers who are “expecting to pay a little more” in the current economy.
“I think this is profiteering,” Owens said.
The paper’s authors stated that scores of corporate executives have even “bragged” about their windfalls on quarterly earnings calls.
The report gives one particularly alarming example in the cost of diapers. The industry is “highly concentrated,” it said, noting how Procter & Gamble Co. and Kimberly-Clark Corp. control some 70% of the U.S. market.
Diaper prices have increased 30% from 2019, from an average of $16.50 to almost $22, in large part due to wholesale wood pulp costs, according to the paper’s authors. But wood pulp has come down from its 2021 and 2022 highs, while diaper prices have not, they said.
Inflation, which has squeezed households across the country, is a major issue for candidates ahead of the 2024 presidential election. President Joe Biden has repeatedly laid blame on corporations, blasting their CEOs for “price gouging.”
The Groundwork Collaborative report adds support to progressives’ argument that corporate greed is actually what is hurting Americans — a phenomenon dubbed “greedflation.”
That idea, however, is hotly debated. Last fall, a Federal Reserve economist released a report arguing that corporate profits were not so abnormally high when considering factors like government support for small businesses.