WASHINGTON, D.C. – Since August 2021, Groundwork has highlighted corporate profiteering through research, opinion pieces, media appearances, polling, and congressional testimony. Nearly two years later, we have seen this narrative take center stage across the media landscape, driven by new research by Groundwork, Isabella Weber, and many others.
Below is a compilation of strong reporting that dives into the relationship between corporate profits and inflation. To speak to Groundwork’s Chief Economist Dr. Rakeen Mabud or Executive Director Lindsay Owens, email firstname.lastname@example.org. For additional background, you can read our explainer on inflation and corporate profits here.
MEDIA ROUNDUP ON INFLATION & CORPORATE PROFITS
Business Insider: The real monster behind soaring prices. Supply-chain issues and other disruptions made sense as drivers of higher prices, Chris Becker, a senior economist and the associate director of policy and research at the Groundwork Collaborative, told me. But the degree to which companies pushed higher prices in an effort to not only pass on cost increases but also increase their profits and margins made it clear that corporations were just trying to “use this environment” to pad their bottom lines. [5/2/23]
Wall Street Journal: Why Is Inflation So Sticky? It Could Be Corporate Profits. But there are signs that companies are doing more than covering their costs. According to economists at the ECB, businesses have been padding their profits. That, they said, was a bigger factor in fueling inflation during the second half of last year than rising wages were. [5/2/23]
Bloomberg: ECB Wakes Up to Greedflation as Key Culprit in Price Struggle. Officials speaking this month increasingly highlight the importance of surging profits in the euro zone’s most severe spell of inflation, with President Christine Lagarde warning in late March of a “tit-for-tat” dynamic where widening corporate margins propel salaries and prices ever higher. [4/27/23]
TIME: How Food Companies’ Massive Profits Are Making Your Groceries More Expensive. And as more food companies are reaping the rewards of higher profit, it could result in your grocery prices staying at these inflation-driven levels for longer, says Chris Becker, a senior economist at Groundwork Collaborative, which promotes left-leaning economic policies. “When shareholders see that other corporations are getting away with high pricing, they start wanting to get in on it,” he says. “So other corporations then raise prices to deliver profit margins.” [4/6/23]
Fortune: ‘We may be looking at the end of capitalism’: One of the world’s oldest and largest investment banks warns ‘Greedflation’ has gone too far. When costs go up, so do profits? That’s not how capitalism is supposed to work, but that is the recent trend. For over a year now, consumers and businesses, both in the U.S. and worldwide, have struggled with stubborn inflation. But the soaring costs haven’t prevented corporations from raking in record profits. [4/5/23]
Société Générale: Are record margins ‘greedflation’, ‘excuseflation’ or just plain price gouging? Instead of ranting about the current crisis I want to revisit a topic that goes straight to the hearts of both equity and bond investors, namely that the primary driver of this inflation cycle is soaring profit margins. Rather than calling this out as the primary cause of high inflation, central banks have instead chosen to focus on rising nominal wages as threatening to embed higher inflation – the so called ‘wage/price spiral’. [3/23/23]
Vox: Inflation is the best thing that ever happened to food companies. “Corporate profits have hit their highest level ever, and corporate profit margins — how much they’re making on each unit that they’re selling — have hit the highest level in 70 years,” said Chris Becker, senior economist at the Groundwork Collaborative, a progressive economic advocacy organization. [3/17/23]