I have read that many if not most military personnel and their families are in favor of Corporal Bonespurs (the man who called POWs "losers" and has made many derogatory remarks about the military). On reading his hateful, lying, self-centered, spittle-inflected Memorial Day message, I wonder how any such person could vote for him.
The trick is that they assume he is talking about someone else. It reminds me of the joke about the guy who is so charismatic that when he tells people to go to hell they look forward to the trip.
His following, including those in the military, is a cult. There is no clear-headed assessment of the meaning of his statements, there is only cheering on of his enraged grunts and mumbles directed at a vaguely defined and dehumanized others.
I wonder how many cult members respond positively to a leader who regularly tells them he despises them? I suppose it is always a rational person's dilemma--how to understand 'beliefs' that have no rational basis.
Michael, interesting comment. I am a military veteran and I am a Never Trumper. In my ten years of service in the 1960’s and 1970’s I never once was approached with a political poll (and neither was my spouse). I guess times have changed.
The only “political” message I ever got was when I was in Egypt in 1974. The message for all hands distribution was “Nixon is still President.” We all scratched our heads, said whatever and went back to demining the Suez Canal.
I wonder if Tommy Tuberville’s screwing around with officer’s military pay has had an impact .His antics hurt military families more than the officers themselves. Also the Trump/Republican issue on women’s healthcare likely has had an impact.
I wonder whether the statement is true or just media hype with no basis.
Anyone reading my comments knows how I feel about the orange haired evil. But I can't get too exercised over his Vietnam deferment. Biden also got one due to asthma. He's also told a few whoppers lately that no one can verify. He played high school football and apparently had a decent senior season as a receiver. Was the Naval Academy all agog at the thought of recruiting him? I detest Trump more than any of you. Biden, to me, is not a great choice. Taking into account Trump's stated demands for attacks on democracy, I simply see Biden as the lesser of two evils. I wasn't that thrilled with Biden in the first place. He was a lifelong politician with a reputation more for political deal making that fulfilling hopes and dreams. But I supported him for the same reasons I now use. It's time to quit giving Trump credit for things he didn't do and remember what he has already said he would do.
I agree that anything other that defeating Trump is a sideshow. I have a different view of president Biden (i.e., I do not think he is evil) but reasonable people may differ while accepting the same facts. The fact that the president is not a moral monster should be good enough for any voter.
I like that last comment! Fascinating! Good luck convincing MAGAs that believe him to be Superman, Mighty Mouse, and Captain America all rolled into one. Some have even compared him to Jesus, Gandhi, and Mandela. MAGAs need glasses and there just has to be some magic elixir returning them to reality.
I can get exercised over Trump’s deferment. He actively defrauded his draft board by providing a fake medical condition (bone spurs). Only the rich and connected could do crap like that.
Biden, I believe, provided an honest medical report.
Just one more example of Trump’s cowardice, he did not want to serve, did not want to go to Canada and did not want to fight in court based on principles.
So he cheated, I respect people who opposed their draft status based on principle.But I have nothing but contempt for draft dodgers that used fraud to avoid serving. When you also add the fact he poses as a patriot and “great American”, it is just icing on the cake.
I have been voting since McGovern-Nixon. With the exception of Barack Obama, I have never voted for a candidate, but for the lesser of 2 evils. It ain't a popularity contest; it's a transfer of power. If you want, as David L seems to, to transfer power to someone who has never had any interest in any principles other than his own self-advancement and his gang of incompetent chuckleheads, have at it. As for me and mine, we will vote for the party and the president that has some interest in actually governing with some competence.
I don't necessarily disagree with you. Much of it is 2 people looking at the same scene and seeing 2 different things. In reality it is a popularity contest. It's also about self interest. People supporting Trump believe they are going to get what they want from his leadership. Other things concerning the duties of the person in the White House don't concern them. There's no arguing the point with MAGAs. Biden is a failure. Trump did what they wanted when he was in office and will do it again. His faults are either due to the liberal media or don't matter. I believe his faults and liabilities do matter. But there's another problem. Many liberals and independents see Biden as a failure. They are willing to let Trump take over to punish Biden. If Trump is elected, they will find themselves really disappointed. So, yes, we sometimes takes the lesser of 2 evils. If anyone is disappointed in Biden's performance, they need to ask what they think they're going to from Trump. It would also be nice if MAGAs would look at something other than their wallets and see the big picture.
I don’t see what General Mills’ slightly better than expected quarterly results has to do with inflation. Those kind of results are totally normal and occur during inflation, deflation, or whatever. NVIDIA OTOH is producing almost unheard-of profit and growth. Maybe they’re causing inflation?
Best not to join the army of media would-be analysts picking out pieces of data to explain macro trends. As one of your readers pointed out, each day we hear the cherry-picked good news or bad news that is supposed to explain the day’s stock market moves. This is almost all tea-leaf reading for the listener’s entertainment.
Inflation is caused by a change in the balance between money-supply and demand. The government has been aggressively increasing the money supply through things like increased borrowing from the future to spend right away.
Profit taking during inflationary times is part of the problem. Companies see rising prices and decide to boost their own prices higher or faster than they would have. It's called "Greedflation" See ‘Greedflation’ caused more than half of last year’s inflation surge, study finds, as corporate profits remain at all-time highs" in Fortune: https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/
In case you hit the paywall: >>>>Corporate profits drove 53% of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic, the report found, analyzing Commerce Department data. That’s a massive jump from the four decades prior to the pandemic, when profits drove just 11% of price growth. ... Consumer-facing companies have been upfront with investors about their price-raising strategies—and they don’t seem interested in a reversal. PepsiCo’s CFO Hugh Johnston said last spring the company could “increase margins during the course of the year;” construction materials giant Holcim said in October it would raise its margins to make up for falling demand, and consumer-products giant Procter & Gamble this summer boasted of an $800 million profit increase, thanks to falling commodity costs that it would not pass on to consumers. ...It’s not just the left making this argument. The Federal Reserve Bank of Kansas City has also found corporate profits playing an outsize role in price growth. The Kansas City Fed, in a recent study, found that growth in markups accounted for more than half of consumer price inflation for 2021, a “substantially higher contribution than during the preceding decade.” Last month, the largest review to date of greedflation, from the Institute for Public Policy Research and Common Wealth, looked at 1,300 companies across four continents and concluded that profiteering by a relatively small set of companies pushed up consumer prices “significantly higher” than would have happened from the supply-chain shocks alone.>>>
See also: "Profit Inflation Is Real" https://www.ineteconomics.org/perspectives/blog/profit-inflation-is-real >> Some CEOs have admitted on shareholder calls and in surveys that they have been taking advantage of inflation to raise profit margins by increasing prices beyond what is needed to offset any increase in their input costs ... big corporations have clearly taken advantage of the current generalized inflationary moment. .... Under the motto, “never let a crisis go to waste”, large corporations, across many industries, used the occasion to raise markups and profits to the ultimate benefit of their shareholders and at huge costs for the rest of society, because “they could do it”. Essentially what has happened and is still happening is that dominant firms have been using the inflationary environment as an excuse to raise prices more than necessary, because they do know that their competitors will do the same—rather than forcing them to keep prices down.>>
Greedflation, or gouging (including shrinkflation) or whatever you want to call it is one of the side-effects of inflation, one which prolongs it. It allows companies to cash in on consumer inertial habits and general expectations of higher prices. But it can't last forever, as usual market forces bring it into line.
One of those market forces is consumer behavior, which has to actually change in response to higher prices, at least temporarily. That means doing stuff that lots of people don't ordinarily do, like bargain-hunting, choosing off-brand versions, substituting products or activities with cheaper alternatives, and sometimes just doing without.
The bad news is that companies gonna gouge if they can, especially those who offer a generally inexpensive but also unique product people have attachments to and thus engage in "monopolistic competition," as they call it in the micro-econ books, like McDonald's or PepsiCo or General Mills.
The good news is that consumers have the power to stop the gouging by not going along with it and by being a little more flexible. Buy the sale items, buy the generic brand, take the bulk deals (eggs last longer than you think!), download that annoying app at the Jewel or the McDonald's (doing the app thing, if it's on offer, generally gives you deals because, from their perspective, it opens a marketing opportunity, provides information they can use and/or sell, and gooses repeat visits), or Costco or Aldi it or whatever. Such deals can on a day-to-day level dwarf the effects of elevated inflation while it persists and also hasten its return to normal levels as producers get the message that consumers won't just take it.
To the extent they do just take it, they're basically telling companies that they're willing to pay more, and those companies would be foolish not to say, okay, well thank you very much. Their entire purpose in the world, after all, not to mention their legal obligation, is to maximize profits.
My question is why can retailers increase profit margins during times of high inflation more than other times? They always want to increase profits, so what is different? Is it just this recent price surge, or is there a general pattern of higher profits during relatively high inflation?
Another way to ask the same question is why are consumers willing to pay inflated prices during inflation?
I will look into it, but for now I will offer a simple possible explanation. That is how profit is defined, which is price minus cost the company paid to acquire the product or deliver the service. In retail a store might buy a widget for $10 and sell it for $15. Then inflation hits and the wholesale widget price goes up to $12, and the retailers operating costs go up a little. If they sell it raise the price to $18 on all of the existing widget inventory then when they sell it they will report a profit of $8 for each widget -- much more than the $5 which they had gotten before. It seems like their gross margin when up 60% when wholesale inflation only went up by 25%. BUT the actual cost of selling a widget is that they have to buy a new one to refresh their inventory and that cost is $12. So their economic profit went from $5 to $6.
So you're saying that corporate costs lag forward-thinking price increases, and they're just cashing in on the difference, which will soon catch up. That seems plausible when it comes to widgets that sit around, but not when there isn't much inventory to speak of, where turn-over is fast, as with food. General Mills isn't selling pre-inflation Cheerios today. At least, I hope they're not!
My theory is that consumers are more willing to pay more amid inflation because they've been conditioned to expect general price increases and are thus less likely to have a "fuck you" reaction to a significant price hike by a single producer, when that producer has to go out on a limb and others won't follow. Inflation furnishes an explanation and justification for price increases beyond costs and thus an environment where companies, without actually colluding, can kinda sorta do it. Inflation, in short, gives companies cover they would ordinarily lack to raise prices. If consumers won't go along with it -- as they shouldn't! -- then, fine, oopsy, that didn't work. But, given that consumers have attachments to certain products and are slow to change their buying habits, it seems -- all at once to all of 'em -- like it's worth a shot. Maybe that's naive, but it seems plausible to me.
Here is a link to a summary of a study by the NY Fed which examines the empirical relationship between corporate profits and wholesale inflation rates. It is a boon for some companies, but most companies have a drop in profit. Overall, profit is up.
It cites the Groundwork Collective, and states their left leaning bias. It also cites Jason Furman, who was an economist who worked in the Obama administration. He believes that greedflation has at most a small effect.
@Andreas Danckers - not a terrible idea but I'm not sure I want to be tracked between toll gates, seems ripe for abuse. Also, how do we punish the driver when it isn't the registered owner who committed the infraction? Should I really be on the hook if my offspring or In-Laws borrow my car?
When we get red-light or speed tickets we usually consult the calendar to try to figure out which one of us -- me, my wife, my son )who occasionally borrows a car) -- was driving. It's pretty weird that these notifications don't arrive for weeks after the fact. Seems like the ticket could be generated almost immediately and emailed to the violator, then mailed out only after a non-responsive period.
I guess people like me who ride motorcycles will pay a reduce fine when speeding? Anything that saves me money is a good thing. Also, I little correction on Andreas' semi weight. If the semi has cargo that weighs 45,000 pounds then (depending on tractor size and fuel level) the combine weight will be close to 80,000 pounds. The ticket will be much higher.
you might have meant this on the main thread instead of a sub-thread but I guess it depends on how fast you can get that motorcycle going because that would increase Kinetic Energy as well.
Just a quick thought on the economy and rescessions. I tend to look at behavior and not too much on theory.
The news reported record air travel this holiday weekend as well as lots of travel on the roads. People do not travel in a recession. The polls and media may yap about the economy, but the American people indicate no recession with their feet.
I was so shocked by that recent Harris poll that I have to question the methodology and veracity of it. As EZ pointed out, the confusion over rate of inflation and rising prices that won’t come down is understandable. But the stock market and unemployment rates? Incomprehensible that such a large segment of the public, across the political spectrum no less, could be so wrong.
I’m annoyed by speeding cars on the expressway, but I’m terrified and sometimes enraged by the 18-wheelers that share the space yet outweigh us by several tons. When my kids were little and riding in the back seat of our minivan, I would glance in the rear view mirror to see that only a few feet separate them from a speeding, tailgating semi that would mean instant tragedy if I had to hit the brakes. Bring on the kinetic energy penalty!
Police arrest someone for a very serious crime, often a repeat offender. The judge assigns a court date and releases the person. Is there a financial issue, the costs of incarcerating all of these criminals?
Weird that a noted economist would post that Reagan/Biden comparison with no reference to where inflation and interest rates were when they took office. In Carter's last year, Inflation and the 10-year T-note were both well above 10%. When Biden took office, inflation and the 10-year T-note were both under 2%. Inflation went from 13.55% to 3.21% from 1980-1983. Inflation went from 1.23% to 8.00% from 2020 to 2022. Just some further data...
EZ, apology accepted. Your information about all Griffin's donations is interesting. Like many in the financial and tech sphere, he may have moved away from Democrats and is now sadly willing to risk a Trump presidency. As social media has pushed everyone to tribal politics, and gerrymandering has pushed the two political parties to their far right and far left bases, there seems to be little room to discuss policy nuances anymore without resorting to labels. And I suppose our two party system exacerbates all of this since on election day we are forced to choose a side, which is often who we dislike the least.
The federal reserve, specifically the Federal Open Market Committee, is the entity which is really doing something about inflation. Imposing import tariffs does the opposite.
The last iteration of govt spending during the pandemic for economic stimulus *may* have added to inflation, but the main cause is clearly the supply shock, which put us into an inflationary feedback loop.
Ken Griffin did not move to Miami, a racially and culturally diverse city. He moved to Florida, a red state with lower taxes. It is correct he first supported Nick Irwin a turnkey Democrat, not going anywhere in the Democratic Party. It is becoming a national tradition of politicians jumping ship and changing parties when they don't get their way. But getting back to Griffin, no one is denying his financial contributions to the city. He was probably planning to move to Florida anyway. People that rich don't make moves like that on a whim. The real question is people getting their names on things just for writing checks. There are more deserving people, such as anyone associated with the founding of the Museum of Science and Industry. For all the attention given Daniel Burnham and lakefront planning, I don't see a lot named after him after Burnham Harbor. So it's not merely politics with those objecting to Griffin's name on the museum. Did anyone ask Griffin? Will he want the money back if there is another change in the future?
There's also Burnham Park, but look at what crooks running Northwestern University did with Dyche Stadium. When the Dyche Family gave money for it, NU signed a contract that it would be always be named for them, in perpetuity & then some insurance guy named Ryan gave them money & they renamed it Ryan Field. Now they've torn down Dyche Stadium & will build yet another new Ryan Field.
The problem with Kim Foxx's new policy on not prosecuting for drugs or guns seized through minor traffic stops is that it not only makes our city less safe, it makes a sham out of Democrats calling for any gun control legislation.
Skipping back to the most appropriate descriptor for a "justice-impacted individual" (which indeed is both misleading and clunky), Eric last week sensibly wrote "When those who have been convicted of breaking the law have served their time, I’m all for mentioning their past criminal histories only when relevant, and then to be sure to use the prefix 'ex' as applicable."
I propose taking his impulse a bit further yet. Jails and prisons are called correctional facilities, so surely it would strike the right balance between someone's past bad decision AND potential for redemption to refer to said person as a corrected-offender, corrected-criminal, etc.
1. I’ve worked for years at a pro bono legal aid organization where we urge attorneys to volunteer and provide “equal access to Justice”. The phrase “Justice-Impacted Individual doesn’t work because it’s too generic. The people I’ve represented for years were positively justice-impacted because they got free legal services and had a fair shot in their civil cases. People who are acquitted thanks to their public defense atty are also positively justice-impacted. The phrase simply doesn’t fit the crime (pun intended).
2. Hillary got so much shit for allegedly calling Trump supporters deplorables. But she defined deplorables in her speech, specifically not including all Trump supporters. etc. I realize that is too fine a point for political smears and for Trump. But it still grinds me.
I have read that many if not most military personnel and their families are in favor of Corporal Bonespurs (the man who called POWs "losers" and has made many derogatory remarks about the military). On reading his hateful, lying, self-centered, spittle-inflected Memorial Day message, I wonder how any such person could vote for him.
The trick is that they assume he is talking about someone else. It reminds me of the joke about the guy who is so charismatic that when he tells people to go to hell they look forward to the trip.
His following, including those in the military, is a cult. There is no clear-headed assessment of the meaning of his statements, there is only cheering on of his enraged grunts and mumbles directed at a vaguely defined and dehumanized others.
I wonder how many cult members respond positively to a leader who regularly tells them he despises them? I suppose it is always a rational person's dilemma--how to understand 'beliefs' that have no rational basis.
It turns out his second son, the one everyone calls a moron, proved that's accurate again with a post everyone is calling disgusting:
https://www.the-express.com/news/us-news/138671/Eric-Trump-Memorial-Day-social-media-backlash
Michael, interesting comment. I am a military veteran and I am a Never Trumper. In my ten years of service in the 1960’s and 1970’s I never once was approached with a political poll (and neither was my spouse). I guess times have changed.
The only “political” message I ever got was when I was in Egypt in 1974. The message for all hands distribution was “Nixon is still President.” We all scratched our heads, said whatever and went back to demining the Suez Canal.
I wonder if Tommy Tuberville’s screwing around with officer’s military pay has had an impact .His antics hurt military families more than the officers themselves. Also the Trump/Republican issue on women’s healthcare likely has had an impact.
I wonder whether the statement is true or just media hype with no basis.
Anyone reading my comments knows how I feel about the orange haired evil. But I can't get too exercised over his Vietnam deferment. Biden also got one due to asthma. He's also told a few whoppers lately that no one can verify. He played high school football and apparently had a decent senior season as a receiver. Was the Naval Academy all agog at the thought of recruiting him? I detest Trump more than any of you. Biden, to me, is not a great choice. Taking into account Trump's stated demands for attacks on democracy, I simply see Biden as the lesser of two evils. I wasn't that thrilled with Biden in the first place. He was a lifelong politician with a reputation more for political deal making that fulfilling hopes and dreams. But I supported him for the same reasons I now use. It's time to quit giving Trump credit for things he didn't do and remember what he has already said he would do.
I agree that anything other that defeating Trump is a sideshow. I have a different view of president Biden (i.e., I do not think he is evil) but reasonable people may differ while accepting the same facts. The fact that the president is not a moral monster should be good enough for any voter.
I like that last comment! Fascinating! Good luck convincing MAGAs that believe him to be Superman, Mighty Mouse, and Captain America all rolled into one. Some have even compared him to Jesus, Gandhi, and Mandela. MAGAs need glasses and there just has to be some magic elixir returning them to reality.
I can get exercised over Trump’s deferment. He actively defrauded his draft board by providing a fake medical condition (bone spurs). Only the rich and connected could do crap like that.
Biden, I believe, provided an honest medical report.
Just one more example of Trump’s cowardice, he did not want to serve, did not want to go to Canada and did not want to fight in court based on principles.
So he cheated, I respect people who opposed their draft status based on principle.But I have nothing but contempt for draft dodgers that used fraud to avoid serving. When you also add the fact he poses as a patriot and “great American”, it is just icing on the cake.
The podiatrist that gave the fat orange traitor that bone spur diagnosis, was then given a really cheap office rent by Fred Trump.
An obvious bribe!
I have been voting since McGovern-Nixon. With the exception of Barack Obama, I have never voted for a candidate, but for the lesser of 2 evils. It ain't a popularity contest; it's a transfer of power. If you want, as David L seems to, to transfer power to someone who has never had any interest in any principles other than his own self-advancement and his gang of incompetent chuckleheads, have at it. As for me and mine, we will vote for the party and the president that has some interest in actually governing with some competence.
I don't necessarily disagree with you. Much of it is 2 people looking at the same scene and seeing 2 different things. In reality it is a popularity contest. It's also about self interest. People supporting Trump believe they are going to get what they want from his leadership. Other things concerning the duties of the person in the White House don't concern them. There's no arguing the point with MAGAs. Biden is a failure. Trump did what they wanted when he was in office and will do it again. His faults are either due to the liberal media or don't matter. I believe his faults and liabilities do matter. But there's another problem. Many liberals and independents see Biden as a failure. They are willing to let Trump take over to punish Biden. If Trump is elected, they will find themselves really disappointed. So, yes, we sometimes takes the lesser of 2 evils. If anyone is disappointed in Biden's performance, they need to ask what they think they're going to from Trump. It would also be nice if MAGAs would look at something other than their wallets and see the big picture.
Beth Bales: You're buying your Cheerios in the wrong store.
I buy them at either Costco or Sam's Club & get a two pack of the biggest boxes they make for under $7.
Or you could go to Aldi & buy their knockoff for a lot less, but I stopped that, because while it's OK, the real Cheerios do taste better.
Many knockoff cereals are just fine, but knockoff Cheerios really aren’t as good. This gives me an idea for a Facebook thread.
I don’t see what General Mills’ slightly better than expected quarterly results has to do with inflation. Those kind of results are totally normal and occur during inflation, deflation, or whatever. NVIDIA OTOH is producing almost unheard-of profit and growth. Maybe they’re causing inflation?
Best not to join the army of media would-be analysts picking out pieces of data to explain macro trends. As one of your readers pointed out, each day we hear the cherry-picked good news or bad news that is supposed to explain the day’s stock market moves. This is almost all tea-leaf reading for the listener’s entertainment.
Inflation is caused by a change in the balance between money-supply and demand. The government has been aggressively increasing the money supply through things like increased borrowing from the future to spend right away.
https://fiscaldata.treasury.gov/americas-finance-guide/national-deficit/#us-deficit-by-year
Profit taking during inflationary times is part of the problem. Companies see rising prices and decide to boost their own prices higher or faster than they would have. It's called "Greedflation" See ‘Greedflation’ caused more than half of last year’s inflation surge, study finds, as corporate profits remain at all-time highs" in Fortune: https://fortune.com/2024/01/20/inflation-greedflation-consumer-price-index-producer-price-index-corporate-profit/
In case you hit the paywall: >>>>Corporate profits drove 53% of inflation during the second and third quarters of 2023 and more than one-third since the start of the pandemic, the report found, analyzing Commerce Department data. That’s a massive jump from the four decades prior to the pandemic, when profits drove just 11% of price growth. ... Consumer-facing companies have been upfront with investors about their price-raising strategies—and they don’t seem interested in a reversal. PepsiCo’s CFO Hugh Johnston said last spring the company could “increase margins during the course of the year;” construction materials giant Holcim said in October it would raise its margins to make up for falling demand, and consumer-products giant Procter & Gamble this summer boasted of an $800 million profit increase, thanks to falling commodity costs that it would not pass on to consumers. ...It’s not just the left making this argument. The Federal Reserve Bank of Kansas City has also found corporate profits playing an outsize role in price growth. The Kansas City Fed, in a recent study, found that growth in markups accounted for more than half of consumer price inflation for 2021, a “substantially higher contribution than during the preceding decade.” Last month, the largest review to date of greedflation, from the Institute for Public Policy Research and Common Wealth, looked at 1,300 companies across four continents and concluded that profiteering by a relatively small set of companies pushed up consumer prices “significantly higher” than would have happened from the supply-chain shocks alone.>>>
See also: "Profit Inflation Is Real" https://www.ineteconomics.org/perspectives/blog/profit-inflation-is-real >> Some CEOs have admitted on shareholder calls and in surveys that they have been taking advantage of inflation to raise profit margins by increasing prices beyond what is needed to offset any increase in their input costs ... big corporations have clearly taken advantage of the current generalized inflationary moment. .... Under the motto, “never let a crisis go to waste”, large corporations, across many industries, used the occasion to raise markups and profits to the ultimate benefit of their shareholders and at huge costs for the rest of society, because “they could do it”. Essentially what has happened and is still happening is that dominant firms have been using the inflationary environment as an excuse to raise prices more than necessary, because they do know that their competitors will do the same—rather than forcing them to keep prices down.>>
The Groundwork Collective? Their stated raison d’etre is ending corporate profiteering. I trust them to give exactly one view, no matter what.
Greedflation, or gouging (including shrinkflation) or whatever you want to call it is one of the side-effects of inflation, one which prolongs it. It allows companies to cash in on consumer inertial habits and general expectations of higher prices. But it can't last forever, as usual market forces bring it into line.
One of those market forces is consumer behavior, which has to actually change in response to higher prices, at least temporarily. That means doing stuff that lots of people don't ordinarily do, like bargain-hunting, choosing off-brand versions, substituting products or activities with cheaper alternatives, and sometimes just doing without.
The bad news is that companies gonna gouge if they can, especially those who offer a generally inexpensive but also unique product people have attachments to and thus engage in "monopolistic competition," as they call it in the micro-econ books, like McDonald's or PepsiCo or General Mills.
The good news is that consumers have the power to stop the gouging by not going along with it and by being a little more flexible. Buy the sale items, buy the generic brand, take the bulk deals (eggs last longer than you think!), download that annoying app at the Jewel or the McDonald's (doing the app thing, if it's on offer, generally gives you deals because, from their perspective, it opens a marketing opportunity, provides information they can use and/or sell, and gooses repeat visits), or Costco or Aldi it or whatever. Such deals can on a day-to-day level dwarf the effects of elevated inflation while it persists and also hasten its return to normal levels as producers get the message that consumers won't just take it.
To the extent they do just take it, they're basically telling companies that they're willing to pay more, and those companies would be foolish not to say, okay, well thank you very much. Their entire purpose in the world, after all, not to mention their legal obligation, is to maximize profits.
My question is why can retailers increase profit margins during times of high inflation more than other times? They always want to increase profits, so what is different? Is it just this recent price surge, or is there a general pattern of higher profits during relatively high inflation?
Another way to ask the same question is why are consumers willing to pay inflated prices during inflation?
I will look into it, but for now I will offer a simple possible explanation. That is how profit is defined, which is price minus cost the company paid to acquire the product or deliver the service. In retail a store might buy a widget for $10 and sell it for $15. Then inflation hits and the wholesale widget price goes up to $12, and the retailers operating costs go up a little. If they sell it raise the price to $18 on all of the existing widget inventory then when they sell it they will report a profit of $8 for each widget -- much more than the $5 which they had gotten before. It seems like their gross margin when up 60% when wholesale inflation only went up by 25%. BUT the actual cost of selling a widget is that they have to buy a new one to refresh their inventory and that cost is $12. So their economic profit went from $5 to $6.
So you're saying that corporate costs lag forward-thinking price increases, and they're just cashing in on the difference, which will soon catch up. That seems plausible when it comes to widgets that sit around, but not when there isn't much inventory to speak of, where turn-over is fast, as with food. General Mills isn't selling pre-inflation Cheerios today. At least, I hope they're not!
My theory is that consumers are more willing to pay more amid inflation because they've been conditioned to expect general price increases and are thus less likely to have a "fuck you" reaction to a significant price hike by a single producer, when that producer has to go out on a limb and others won't follow. Inflation furnishes an explanation and justification for price increases beyond costs and thus an environment where companies, without actually colluding, can kinda sorta do it. Inflation, in short, gives companies cover they would ordinarily lack to raise prices. If consumers won't go along with it -- as they shouldn't! -- then, fine, oopsy, that didn't work. But, given that consumers have attachments to certain products and are slow to change their buying habits, it seems -- all at once to all of 'em -- like it's worth a shot. Maybe that's naive, but it seems plausible to me.
Here is a link to a summary of a study by the NY Fed which examines the empirical relationship between corporate profits and wholesale inflation rates. It is a boon for some companies, but most companies have a drop in profit. Overall, profit is up.
https://libertystreeteconomics.newyorkfed.org/2022/07/do-corporate-profits-increase-when-inflation-increases/
Here is a light piece from the nytimes.
https://www.nytimes.com/2022/06/14/briefing/inflation-supply-chain-greedflation.html
It cites the Groundwork Collective, and states their left leaning bias. It also cites Jason Furman, who was an economist who worked in the Obama administration. He believes that greedflation has at most a small effect.
I tried the Aldi cheerios. They're terrible. On to Costco!!
I haven't priced them lately, but Trader Joe's "Joe's O's" are quite good. Actually, I prefer them to real Cheerios.
Trader Joe's are exactly the same as Aldi's!
@Andreas Danckers - not a terrible idea but I'm not sure I want to be tracked between toll gates, seems ripe for abuse. Also, how do we punish the driver when it isn't the registered owner who committed the infraction? Should I really be on the hook if my offspring or In-Laws borrow my car?
Already true with speed cameras and parking tickets.
but is that fair and just, or just the best we can do?
It’s your car, so yes you should be responsible. Be more careful who you kept drive it.
In theory of course. But let's say you let said in-law borrow the car dozens of times without incident, why wouldn't you trust them on #13?
When we get red-light or speed tickets we usually consult the calendar to try to figure out which one of us -- me, my wife, my son )who occasionally borrows a car) -- was driving. It's pretty weird that these notifications don't arrive for weeks after the fact. Seems like the ticket could be generated almost immediately and emailed to the violator, then mailed out only after a non-responsive period.
definitely a feature and not a bug of the system.
It would be a long time before there’d be a14th time!
I guess people like me who ride motorcycles will pay a reduce fine when speeding? Anything that saves me money is a good thing. Also, I little correction on Andreas' semi weight. If the semi has cargo that weighs 45,000 pounds then (depending on tractor size and fuel level) the combine weight will be close to 80,000 pounds. The ticket will be much higher.
you might have meant this on the main thread instead of a sub-thread but I guess it depends on how fast you can get that motorcycle going because that would increase Kinetic Energy as well.
Just a quick thought on the economy and rescessions. I tend to look at behavior and not too much on theory.
The news reported record air travel this holiday weekend as well as lots of travel on the roads. People do not travel in a recession. The polls and media may yap about the economy, but the American people indicate no recession with their feet.
I was so shocked by that recent Harris poll that I have to question the methodology and veracity of it. As EZ pointed out, the confusion over rate of inflation and rising prices that won’t come down is understandable. But the stock market and unemployment rates? Incomprehensible that such a large segment of the public, across the political spectrum no less, could be so wrong.
Has anyone challenged these results?
I’m annoyed by speeding cars on the expressway, but I’m terrified and sometimes enraged by the 18-wheelers that share the space yet outweigh us by several tons. When my kids were little and riding in the back seat of our minivan, I would glance in the rear view mirror to see that only a few feet separate them from a speeding, tailgating semi that would mean instant tragedy if I had to hit the brakes. Bring on the kinetic energy penalty!
Police arrest someone for a very serious crime, often a repeat offender. The judge assigns a court date and releases the person. Is there a financial issue, the costs of incarcerating all of these criminals?
I often refer to his older spawn as Dumb and Dumber.
Weird that a noted economist would post that Reagan/Biden comparison with no reference to where inflation and interest rates were when they took office. In Carter's last year, Inflation and the 10-year T-note were both well above 10%. When Biden took office, inflation and the 10-year T-note were both under 2%. Inflation went from 13.55% to 3.21% from 1980-1983. Inflation went from 1.23% to 8.00% from 2020 to 2022. Just some further data...
https://www.macrotrends.net/global-metrics/countries/USA/united-states/inflation-rate-cpi#:~:text=U.S.%20inflation%20rate%20for%202022,a%200.63%25%20decline%20from%202018.
EZ, apology accepted. Your information about all Griffin's donations is interesting. Like many in the financial and tech sphere, he may have moved away from Democrats and is now sadly willing to risk a Trump presidency. As social media has pushed everyone to tribal politics, and gerrymandering has pushed the two political parties to their far right and far left bases, there seems to be little room to discuss policy nuances anymore without resorting to labels. And I suppose our two party system exacerbates all of this since on election day we are forced to choose a side, which is often who we dislike the least.
The federal reserve, specifically the Federal Open Market Committee, is the entity which is really doing something about inflation. Imposing import tariffs does the opposite.
The last iteration of govt spending during the pandemic for economic stimulus *may* have added to inflation, but the main cause is clearly the supply shock, which put us into an inflationary feedback loop.
I liked the VTOW's even though I voted for the one which was by far the least popular. LOL
Ken Griffin did not move to Miami, a racially and culturally diverse city. He moved to Florida, a red state with lower taxes. It is correct he first supported Nick Irwin a turnkey Democrat, not going anywhere in the Democratic Party. It is becoming a national tradition of politicians jumping ship and changing parties when they don't get their way. But getting back to Griffin, no one is denying his financial contributions to the city. He was probably planning to move to Florida anyway. People that rich don't make moves like that on a whim. The real question is people getting their names on things just for writing checks. There are more deserving people, such as anyone associated with the founding of the Museum of Science and Industry. For all the attention given Daniel Burnham and lakefront planning, I don't see a lot named after him after Burnham Harbor. So it's not merely politics with those objecting to Griffin's name on the museum. Did anyone ask Griffin? Will he want the money back if there is another change in the future?
There's also Burnham Park, but look at what crooks running Northwestern University did with Dyche Stadium. When the Dyche Family gave money for it, NU signed a contract that it would be always be named for them, in perpetuity & then some insurance guy named Ryan gave them money & they renamed it Ryan Field. Now they've torn down Dyche Stadium & will build yet another new Ryan Field.
The problem with Kim Foxx's new policy on not prosecuting for drugs or guns seized through minor traffic stops is that it not only makes our city less safe, it makes a sham out of Democrats calling for any gun control legislation.
Skipping back to the most appropriate descriptor for a "justice-impacted individual" (which indeed is both misleading and clunky), Eric last week sensibly wrote "When those who have been convicted of breaking the law have served their time, I’m all for mentioning their past criminal histories only when relevant, and then to be sure to use the prefix 'ex' as applicable."
I propose taking his impulse a bit further yet. Jails and prisons are called correctional facilities, so surely it would strike the right balance between someone's past bad decision AND potential for redemption to refer to said person as a corrected-offender, corrected-criminal, etc.
1. I’ve worked for years at a pro bono legal aid organization where we urge attorneys to volunteer and provide “equal access to Justice”. The phrase “Justice-Impacted Individual doesn’t work because it’s too generic. The people I’ve represented for years were positively justice-impacted because they got free legal services and had a fair shot in their civil cases. People who are acquitted thanks to their public defense atty are also positively justice-impacted. The phrase simply doesn’t fit the crime (pun intended).
2. Hillary got so much shit for allegedly calling Trump supporters deplorables. But she defined deplorables in her speech, specifically not including all Trump supporters. etc. I realize that is too fine a point for political smears and for Trump. But it still grinds me.