Yesterday I mentioned in passing the Producer Price Index. Here's the latest:
PPI is the inflation rate of inputs to consumer goods. It's what corporations pay for the raw materials used to make the stuff they sell to us.
As you can see, for a full two years PPI has averaged less than it did before the pandemic. At the same time, hourly earnings were only slightly higher than they were before the pandemic:
During this entire time companies continued to raise prices even though there was little justification for it. They just did it to see how much they could get away with.
I can't remember where (sorry - it was Planet Money or Freakonomics) but they had an economist on who had gotten on to a bunch of earnings calls for various companies. And loads of them were telling investors that they were raising prices because they could use "inflation" as cover.
I know people say "companies are always greedy, this is no different" but it is different.
"companies are always greedy, this is no different"
if they all raise prices simultaneously they can temporarily blunt the substitution effect
eventually consumers will put an end to those shenanigans but it may take a few years and we've just started that process (as kevin discussed in his doritos post)
They also know that the business media is generally lazy and compliant when it comes to reporting this stuff and reporters will rarely question the cover story because then the corporate bigwigs will get annoyed with them and they'll lose access. So companies can shovel this shit for as long as they want to, or until reality bites back eventually. As I've been observing here recently as well, they do the same thing with the old canard that inflation and higher wages are forcing all these retailers into bankruptcy, as opposed to the real cause in most cases, which is that they were horribly mismanaged by the vulture capital firms that acquired them with debt.
yeah, sort of a reverse poison pill
it really seems like there are so few attractive investment opportunities in late-stage capitalism that there's nothing left but the financialization game
the housing bubble was the result of so much money sloshing around the system that it infected the mortgage/housing industry
now we have venture capital swallowing the medical industry/pharma/hospital chains/private practice/etc with a laser focus on raising prices in an already aggressively-overpriced sector
the big tech firms stopped innovating long ago in favor of buying out any small firms who might eventually pose a competitive threat
maybe it's always been thus; i dunno
there's the prediction that software will eat the world, and that may be true, but i think finance is the knife that cuts it into bite-sized pieces
Shareholder value, baby!
Simple question. Hourly earnings spiked in early 2020 and then collapsed in late 2020 according to the chart. Obviously all this is related to the pandemic but does Kevin or someone have an explanation.
the chart is *growth* of hourly earnings
a 16% rise followed by a 4% drop still leaves hourly earnings at a higher level
so if people quit their jobs to avoid covid, most likely the people leaving were lower paid (so less attractive to continue working) leaving higher paid folks in the employment pool
same for retail operations like sandwich shops etc who let people go when downtown commuters stopped going into the office; the remote workers still had jobs while sandwich makers were unemployed
Thanks
Greed! Plain and simple. Grab the bucks while you can. No wonder there is so little trust from the public.
So then we should see net margins increasing? Got a chart for that?
I remember during the shutdown, as restaurants were allowed to open up for take-out, everyone was running incredible deals to get people back into the habit.
Collectively, had people resisted higher prices by substitution, fast food companies would be in a real panic, worried that these new substitutions would become habitual.
Instead, we're left to wagging the finger at corporate greedflation even while consumers blame POTUS for the doubling of the price of their Big Mac and grande iced mocha.