ICYMI: Fed Chair Powell, Companies “Raising Prices Because They Can”
January 11, 2022 Groundwork Collaborative
Moments ago, Fed Chairman Jerome Powell appeared in front of the Senate Banking Committee. During the nomination hearing, in an exchange with Sen. Warren, he publicly acknowledged that big corporations are taking advantage of inflation for financial gain:
Sen. Warren: “Today, nearly two out of three of the biggest publicly traded corporations in the country are reporting fatter profit margins than they reported before the pandemic, which doesn’t sound like they are just passing along costs. So let me ask you, does that increase in profit margins combined with greater market concentration in industry after industry suggest to you that some corporations may be passing along increased costs and at the same time charging more on top of that to fatten their profits margins?”
Chair Powell: “That could be right, but it could also just be…. that demand is incredibly strong, and that they are raising prices because they can.”
Sen. Warren: “Well that’s the point, they are raising prices because they can, and they are not being competed down.”
Email firstname.lastname@example.org to speak to Dr. Rakeen Mabud, managing director and chief economist at Groundwork, about the link between corporate profiteering and inflation. You can read our most recent findings here.
Below is a sampling of recent reporting on inflation that got it right:
- The New York Times: Fighting Inflation Means Taking On Corporations. Yet inflation doesn’t rise and ebb just because of monetary policy. It’s largely the result of choices businesses make. And history shows presidents have the power to stem inflation by taking on corporate power — if they choose. [12/24/21]
- Fortune: Meet the 4 meat empires Biden says are unreasonably jacking up prices for Americans. President Joe Biden announced plans this week for new rules and $1 billion in funding for independent meat processors and ranchers in an effort to combat what he calls a lack of “meaningful competition” in the meat sector. [1/6/22]
- Data for Progress: Messaging on Inflation Should Stress Policy Solutions, Record Corporate Profits. These findings offer a messaging framework for lawmakers and activists to acknowledge the stress that rising prices are having on families while tackling the root causes of inflation: corporate power and decades of underinvestment. [1/6/22]
- The Washington Post: White House allies split over inflation plan as Biden trains attacks on corporate greed. “The truth is the link between price hikes and profiteering is hiding in plain sight. It’s clear as day in earnings calls where CEOs can’t stop crowing about their ‘pricing strategies,’” said Lindsay Owens, an economist at the Groundwork Collaborative, a left-leaning group that has encouraged the administration to take a tougher position. [1/10/22]
Groundwork Collaborative: The Groundwork Collaborative’s mission is to advance an economic vision for strong, broadly shared prosperity and true opportunity for all.