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A recent report from a left-leaning group called Groundwork Collaborative, which is associated with the Massachusetts Senator, calculated that corporate profits drove 53% of inflation from April to September 2023.
According to a report from the Groundwork Collaborative, a progressive Think Tank, outsized corporate profits are driving more than half of grocery inflation.
“Even as supply chains have normalized and input costs have fallen, corporations are still padding their profits on the backs of families. Falling inflation has been a welcome sight, but it has more room to fall if corporations stop their excessive profiteering.” Groundwork's Lindsay Owens on new data showing that domestic nonfinancial corporate profits increased $136.5 billion in Q4, compared with an increase of $90.8 billion in Q3.
Recent analysis suggests that corporate profits have significantly contributed to inflationary pressures, with an estimated 53 cents of every dollar of price increases attributed to profits in recent economic quarters. This perspective, supported by the Groundwork Collaborative, highlights the substantial role of corporate profit margins in the inflation narrative.
Lindsay Owens, head of the Groundwork Collaborative, a progressive Washington think tank, is skeptical that it will. With the unemployment rate low, the economy growing at a strong pace and inflation still a concern, the Fed will cut rates too slowly to aid Biden all that much politically, she said. "We're in a 23-year-high interest rate environment and getting another 25-basis point cut or two before November doesn't change the fact that mortgage rates are going to be high," Owens said.
According to The Guardian, a report, compiled by the progressive Groundwork Collaborative thinktank, found that corporate profits accounted for more than half of inflation during last year’s second and third quarters. In the 40 years prior to the pandemic, profits drove just 11% of price growth, the report said.
I want to get into a bit of the nitty-gritty here with you and start with this gap that has started to open up between the Consumer Price Index CPI and the Producer Price Index PPI, which think tanks like Groundwork Collaborative and others, they say it shows that inflation is being driven by companies raising prices or as some of them refer to it, corporate greed.
The Fed spent a lot of its political capital in raising interest rates to get inflation under control and could have to raise rates again if tariffs boosted inflation. But Lindsay Owens, executive director of the liberal Groundwork Collaborative think tank, said Trump could interfere there, too. “The most likely thing you will see from Trump I think — we’ll see it on the campaign, but also you’d see in a Trump presidency — is just a very aggressive advocacy campaign against the Fed,” Owens said.
Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, an economic think tank, said she is worried that the Fed could wait too long to cut rates and damage the economy. “All the Fed can do at this point is break this really strong recovery that we’ve had … I’m worried now because rate hikes are a really imprecise tool that acts with lags. I don’t know exactly when the full impact of these rate hikes are going to play out and neither does Jerome Powell,” she said.
The liberal economic advocacy group Groundwork Collaborative, for instance, compiled a list of times when corporate executives extolled their profits or price increases, and talked of issuing stock buybacks, increasing dividends or benefiting from high prices or high interest rates.