As you read today's inflation report, pay close attention to what the CEOs who set prices are saying. We got our hands on the latest batch of earnings reports, and it's a doozy. They're literally bragging about hiking prices while hiding behind "inflation." The receipts...(1/7)
If you want to understand the role of corporate greed in price hikes & inflation in America today, you don't have to take the word of watchdogs or critics of corporations. CEO's are admitting it themselves in plain daylight.
And they're betting they can get away with it. (END)
CEOs often speak more candidly on earnings calls (held when a new report comes out), in an effort to impress investors, by bragging about their ruthless profit-rigging schemes. It apparently doesn't occur to them that the public might find out about them! For instance... (2/7)
I have steam coming out of my ears over this one.
Constellation's (Modelo, Corona) Q4 earnings call:
CFO "We want to make sure that we're not leaving any pricing on the table. We want to take as much as we can...we'll take as much pricing as we think the consumer can absorb."
The company 3M, which produces N95 masks (and other things) crowed on its earnings call that “the team has done a marvelous job in driving price. Price has gone up from 0.1% to 1.4% to 2.6%." The CFO told investors, "We see that to be a tailwind." (3/7)
Tyson, one of the big 4 meat monopolies Biden is targeting for price-fixing saw profits nearly DOUBLE after price hikes of 32% on beef and 20% on chicken which the CEO attributed to the "continued resilience of our multi-protein portfolio." (4/7)
In its 4th quarter report, Johnson & Johnson revealed it raised prices…despite raking in billions from COVID vaccine sales. Its CEO told investors that the need for medical care & to “address suffering and death” is part of J&J's “optimism” & “opportunity” for its future. (5/7)
Kimberly Clark is a mega-corporation manufacturing everything from paper towels to diapers. On its recent earnings call, CEO Mike Hsu crowed to investors about “multiple rounds” of “significant pricing actions” & admitted he plans to continue doing it throughout the year. (6/7)
🧵Want to know why rents have been skyrocketing? This jaw dropping
@propublica
investigation has one answer--collusion.
@RealPage
's YieldStar proprietary software is helping the nation's biggest landlords and property managers jack up prices together. 1/10
Drop everything you’re doing and watch this clip of
@jonstewart
taking Larry Summers to the cleaners on his cruel inflation cure: obliterating a labor market that is finally starting to work for workers. Three thoughts on what Larry gets so wrong. 1/4
Danger! Workers are doing too well! Call the Fed to shut that down! A conversation with former Treasury Secretary Larry Summers. Watch the full interview in our latest episode, now streaming on
@appletvplus
.
This morning
@politico
dropped a piece giving Larry Summers credit for the major tax legislation in the Inflation Reduction Act. One problem—Larry didn’t propose them, Elizabeth Warren did. A thread with the fact check. 1/5
Since inflation started picking up in 2021 it’s been crystal clear that companies were using it as a screen to hide profiteering, gouging, and even collusion. CEOs like Pioneer Oil’s told us about their plans on TV & on investor calls. Now we have their text messages too. 1/3
If you noticed that corporations' costs are down & they are *still* jacking up their prices for consumers... it's not just you. We've got the receipts. And their secret plans may enrage you. Read my new op-ed ⬇.
And here's a 🧵 1/12
Shrinkflation, greedflation, and now algorithmic price discrimination signal the end of a fair price in America.
It’s increasingly clear that prices are untethered from market fundamentals and instead largely reflect a company’s market and pricing power.
Wendy’s will start experimenting with surge pricing in 2025, along the lines of Uber and Lyft.
Wendy’s will test “dynamic pricing” on burgers, Frosties, and other menu items, which will cost more during times of increased demand.
A little free advice for all the economists on here that seem to be cracking. Put down your phones, grab your friends, go the bar, and reminisce about the good old days of policies like HAMP that were so well-targeted, equitable, and disinflationary they helped precisely no one.
With Shanghai in a near total lockdown, this is a map of the commercial ships currently waiting offshore to be loaded and offloaded of goods; exacerbating global supply chain woes
Full employment is when a Harvard Econ professor’s maid asks for a raise.
Price gouging is when his favorite Swiss ski chalet is just out of reach.
Quick. Someone alert the FTC.
This piece by
@adam_tooze
was very interesting. I’ve been skeptical about some antitrust areas but this seems ripe for attention.
Chartbook
#180
: Do you ski? The political economy of snow, slopes and skiing by
🧵Today's numbers don't come close to reflecting the full geopolitical impact of oil & food prices. But if we listen to recent remarks from CEOs, we can get a good sense of what to expect in the weeks ahead & who the big winners will be: oil companies and their shareholders. 1/8
Wendy’s will start experimenting with surge pricing in 2025, along the lines of Uber and Lyft.
Wendy’s will test “dynamic pricing” on burgers, Frosties, and other menu items, which will cost more during times of increased demand.
Last week we found out that after-tax corporate profits hit an all-time record high in Q4 of 2023. Not a post-pandemic high. An all-time high. There are many reasons for this but let’s talk about three. 1. Inflation has been very good for business. Why? 1/3
I’m still wrapping my head around the fact that the FBI is raiding corporate landlords price fixing in Atlanta.
After watching corporations lie, cheat, and steal with impunity my entire life it’s just incredible to see law enforcement cracking down on the gougers.
Biden is planning to go hard on taxing corporations and the rich in SOTU tonight. He absolutely should. 4 reasons why. 1. Draw a contrast with Trump/Republicans. They say they are going to do a lot of things if they get elected. They always do one. Giant tax cuts. 1/4
“They explicitly recognize that there's going to need to be increases in unemployment to contain inflation,” says
@LHSummers
when discussing the Federal Reserve and the US labor market.
Tune into “Wall Street Week,” airing Friday's at 6 pm ET
One of their big innovations? Push low-price tenants out & sit on empty units instead of dropping prices. “The net effect of driving revenue and pushing people out was $10 million in income. I think that shows keeping the heads in the beds is not always the best strategy.”5/10
Rare to see good accountability journalism. Nice to see
@EricLevitz
taking on this important topic. He’s right—Larry Summers was wrong about the need to drive millions out of work to bring down inflation. Progressives were right. We never had to choose.
2. Jon hones in on the ultimate double standard that economists like Larry employ: corporations should charge whatever the market will bear for their goods, driving up prices, but when workers do the same for their labor, economists want central banks to step in & quash them. 3/4
The team
@propublica
(shoutout
@hvogell
) has done their job reporting on this important source of collusion in rent prices masterfully. Now it is time for Congress (
@SenateBanking
& Senate Judiciary
@JudiciaryDems
) and the Administration (
@FTC
) to do theirs. Shut this down. End.
"Experts say RealPage...invites scrutiny from antitrust enforcers bc of their use of private data on what competitors charge in rent and creation of work groups that meet privately and include landlords who are otherwise rivals, a red flag of potential collusion." 2/10
.
@AOC
asks Chair Powell today if Larry Summers' push for 10% unemployment would translate into the possibility of 20% unemployment for Black workers. Powell confirms that Black unemployment moves at "twice the speed." Maybe let's pass on the Summers proposal.
Larry Summers -- who the president said he spoke with today -- publicly saying a 5% unemployment rate is necessary to combat inflation. To state the obvious, a 5% unemployment rate would mean devastating joblessness for millions of poor American workers
3. Finally, Larry's team clearly did a little research on Apple trying to put Jon in a box on whether he thinks it is ok for Apple to price gouge. It fell flat as a pancake b/c unlike Larry, Jon doesn't form his opinions based on who signs his paycheck & didn't take the bait. 4/4
Looks like removing crushing debt burdens for families is a political winner after all. This is a remarkable 22 point swing with young voters in just one month. The centrist economists turned political pundits got this one wrong.
Some think algorithms can't collude. But a former FTC official says sub "a guy named bob" for the algorithm. “Is it OK for a guy named Bob to collect confidential price strategy information from all the participants in a market and then tell everybody how they should price?” 8/10
“If it isn’t OK for a guy named Bob to do it, then it probably isn’t OK for an algorithm to do it either.” What does the company have to say for itself? They just “capture a truer picture of price elasticity and affordability." Hiding behind economics jargon to price gouge. 9/10
📢📢📢 Want to know why prices are so high? The
@Groundwork
team is on it & today I published some of our findings in this
@nytopinion
piece. Be warned--it's not pretty. But to stop companies from price gouging during crises--we must listen & learn. 🧵1/15
Executives also praised coordinated prices hikes. “A rising tide lifts all boats,” one said. "One of the greatest threats to a landlord’s profit, was other firms setting rents too low at nearby properties. “If you have idiots undervaluing, it costs the whole system.” 6/10
Turns out this isn't their first dalliance with collusion: One of YieldStar’s main architects, Jeffrey Roper was Alaska Airlines’ director of revenue management when it began developing price-setting software in the 1980s. He has personal experience w/ antitrust prosecution. 3/10
There’s a class of wonks that thinks the problem with our economy is that people have too much money (team “excess demand”). They misdiagnosed the problem so they’re proposing wrongheaded-solutions (e.g mass unemployment). Now they’re opposing student loan forgiveness too. 1/3
Must watch video from a big grocery whistleblower. Food prices are already up 12% year over year. Families can’t afford any more. The Kroger/Albertsons mega-merger must be stopped.
NEW: A former VP of Whole Foods lays out why the Kroger/Albertsons mega-merger is a travesty and could even be criminal.
The massive new grocery chain will have near-monopoly control in major cities. Food prices will go up & workers’ wages will go down.
The FTC must block it.
RealPage also bought its biggest competitor. Roper said: “I was surprised the DOJ let that go through.” Their biggest client? Wall Street. A growing share of multifamily buildings are owned by firms backed by Wall Street investors, the most eager adopters of pricing software.7/10
"Federal agents removed a computer & documents from Roper’s office at the airline. He said he wasn't aware of the antitrust implications. “We all got called up before the DOJ bc we were colluding,” he said. “We had no idea.” Well this time he certainly knew better. 4/10
Many experts vehemently denied that profiteering was exacerbating inflation. But as evidence mounted, they conceded it was happening but insisted it was a trivial piece of overall inflation. Turns out they were wrong about that too. A quarter of inflation is hardly trivial! 2/3
Cutting UI is political suicide, yet Republicans are trying to do just that.
As a sociologist who studied attitudes toward the safety net (and former Hill staffer who fought to expand it), we can offer a simple explanation: Republicans believe the safety net should punish. 1/7
It’s time for folks who are serious about bringing down inflation to close their textbooks & open their eyes. Policymakers must study how companies actually set prices, starting by believing the CEOs narrating their plans in broad daylight on earnings calls & Squawk box. 3/3
1. Larry says he's happy to see workers finally have power to command higher wages & walk away from poorly paying jobs. But Jon does a TERRIFIC job of explaining why Larry's preferred inflation fighting strategy, interest rate hikes, works in direct opposition to that goal. 2/4
I gather Larry made one of many calls Manchin received alleviating inflation fears re: IRA—fears Larry amplified! Frankly I’d like to hear from Manchin on how influential that call was. But letting Larry rehab his image on Warren’s back is sexist & journalistic malpractice. 5/5
Diaper prices are up right now--way up. Guess what else is up? CEO pay, stock buybacks, and dividend checks at the two major diaper manufacturers--Kimberly Clark (Huggies, Pull-Ups) and Procter and Gamble (Pampers, Luvs, All Good).
Let's crack down on monopolies, not parents.
Today the
@linakhanFTC
&
@FTC
launched an inquiry into personalized pricing, the latest frontier in price gouging. A personalized price might sound nice, but it is actually a 3-part corporate strategy to spy on you, isolate you, & overcharge you. A 🧵1/6
"Rationing" scarce goods by price gouging is still price gouging. It's ok to be fine with that, and to write snide op-ed's defending it. But know this: CEOs are not acting as efficient stewards of scarce resources. That's a fiction. A thread: 1/6
This is wrong. There should be a robust public debate about policy that influences the livelihoods of millions. I’m a hard pass on telling people to sit on their hands while Powell decides if they have a job tomorrow. This is a core problem w/ outsourcing econ policy to the fed.
So the more you shout at the Fed to stop tightening, the more adamant they will be about tightening. Because if they ease up in the face of popular backlash, it means they're not really independent. And central banks prize the appearance of independence very highly.
There are 1,000 billionaires in America.
You know what the average federal tax rate for these billionaires is? 8.2%!
That’s far less than the vast majority of Americans pay.
No billionaire should pay a lower federal tax rate than a teacher, a sanitation worker, a nurse!
Remember the claim that corps had to raise prices because their costs had gotten so high? We were curious to see if they'd drop prices now that costs on everything from energy to lumber have fallen. Listening in to their earnings calls I can tell you the answer: Not at all. 2/12
Here is
@mattyglesias
covering Warren’s Real Corporate Profits Tax in 2019. After she proposed it, she landed a spot on the Senate Finance Committee & recruited Wyden & moderate Angus King to the effort. Then she got Manchin & Sinema to support. 2/5
This
@SenWarren
speech at
@equitablegrowth
is fire! People will look back on this speech as the moment the Democrats finally got serious about not getting rolled by corporate America in a tax fight. She’s laying down a marker for 2025: there won’t be Dem votes for a bad deal. 1/
Reporting on the Fed often feels like an Alice in Wonderland situation where sometimes down is up and up is down (good jobs numbers=bad!). That's because when you actually spell out with the Fed is aiming to do-obliterate the labor market-it is indeed as bad as it sounds.
It feels really good to finally see some acceptance of this position by folks like
@paulkrugman
and
@ezraklein
. If you study the evolution from Q2 to Q4 earnings calls you can actually see CEOs/firms grappling with this phenomenon in real time. They are studying it closely!
I'll also say, to one of Krugman's points: I was skeptical that corporate greed is what drove inflation, but I've moved more towards the view that cultural permission to raise prices is helping to sustain it.
.
@RepKatiePorter
's Competitive Prices Act closes loopholes that price-gougers use to collude & jack up prices, and it empowers consumers to rein in corporate power through the justice system. Congress should also reinstate a tax on excess profits to discourage profiteering. 10/12
The CEO of PPG, a Fortune 500 paint corp, said that as the cost of raw materials subsides, “We’re not going to be giving this pricing back... we’re telling people, this is the new price and if you don’t like it, please don’t place purchase orders.” Points for honesty? 3/12
“The economy is a garden. You have to take care of it. It needs tending, it needs nurturing,” Walz said . “This idea that you’re somehow thrifty by not investing in education, by not investing in infrastructure, by not investing in health care and research? It makes no sense.”
Since
@mattyglesias
devoted his full column to attacking our new issue of
@TheProspect
, me, and my org
@Groundwork
, a few responses. 1) a lot of his column is a straw man. The issue is called “how pricing works” bc it is indeed about how * pricing * works, a micro phenomenon. 1/6
NEW in the NYT from
@BharatRamamurti
and me: unless Congress acts, millions will take a paycut as they return to work. Our Fair Wage Guarantee would parlay the $600 UI boost into a wage hike, increasing demand and helping low-wage workers most. 1/9
Giving Larry credit for the corporate tax is the biggest fib in the piece but she also deserves much of the credit for elevating tax enforcement as a big revenue raiser. Here
@JHWeissmann
covers her proposal & Larry’s *subsequent* paper in agreement. 4/5
The important test for elite colleges in this era is their overall contribution to opportunity in America.
No more legacy admissions.
No more special admissions for people who've been coached extensively to be good at aristocratic sports.
Expand their class sizes so that
Does anyone else feel like they went to sleep 1 night last week in a 2-party system & woke up the next morning in a coalition government?
This is the 1st time I’ve seen
@USProgressives
work like this & I know it took work (& didn’t happen overnight) to get here.
#HoldTheLine
The CEOs have been admitting precisely this in earnings calls since 2021. Not sure why their investors would answer a survey any differently but nice to have it all in one place courtesy of Bloomberg. Maybe it’s time for policymakers and economics gatekeepers to believe them.
The Bloomberg survey of professional investors shows that 90% think that “companies on both sides of the Atlantic have been raising prices in excess of their costs since the pandemic began in 2020. “ Almost four out of five said that tight monetary policy is the answer 1/
.
@ewarren
introduced a bill to combat price gouging by making it illegal to sell essential goods at excessive prices during an economic crisis. Some 38 states, red & blue, already have price gouging laws on the books so this type of intervention is hardly radical. 11/12
Here’s the fact sheet on the Real Corporate Profits Tax from her presidential primary campaign. As you can see—it’s pretty darn close to the version set to become law in the IRA. 3/5
When customers must buy a product, and/or there are very few alternative options in the marketplace, huge corporations can price gouge. The proof? They're now seeing the highest profit margins since 1950, thanks largely to massive price markups. 8/12
It’s a very bad day for corporate profiteers & a good one for consumers. Biden is curbing excessive junk fees like credit card late fees, making the agricultural sector more competitive to being down grocery prices, & deploying a Strike Force on Illegal and Unfair Pricing. Boom.
Love seeing consumer issues highlighted tonight from airline fees to concert ticket prices to resort feee. This is stuff the admin can do to improve lives and show that government works and is on your side.
I'm pretty concerned about the gaslighting by some folks on our side on inflation. We're better than that.
It's tone deaf, elitist, and just not a good look when 9/10 Americans are reporting concern and prices are indeed, up.
Many things can be true at once! For example:
The need for urgent action on corporate profiteering is undeniable & you don't have to take the word of watchdogs. Corporations are admitting it in broad daylight. And one thing is clear: they won't stop until someone makes them. 12/12
All Receipts:
Why do they get away with it? Well, big corps with huge market power don’t have to think twice about extracting more profit. In some cases, consumers have nowhere else to go due to lack of competition. And some products are essential (eg, diapers) so consumers need them. 7/12
This week I got to join
@jonstewart
on
@TheProblem
to talk about why pricing looks a lot less like they told you it would in Econ 101 and a lot more like an episode of the Sopranos. It was an incredibly fun conversation. I hope you enjoy!
Jon and
@owenslindsay1
talk about how corporate greed is driving the inflation crisis, and about the dirty, dirty deeds that go down in earnings calls.
You can listen to my full conversation with
@jonstewart
on
@theproblem
podcast here:
We talked about the bald-faced profiteering that's accelerating price hikes & why the economy looks more like an episode of the Sopranos than an Econ 101 textbook.
Republicans in disarray stories are cropping up everywhere. There is a simple reason for this. The 2017 tax cuts for wealthy and corporations are deeply, deeply unpopular.
Dems must press their advantage. Now is the time to turn up the volume.
The truth is some center-left wonks don’t like forgiveness but don’t want to say so. Instead they clutch their pearls & talk inflation & deficits.
Don’t overcomplicate it. The choice is up or down. Does Biden forgive the debt & help some folks out or not. I hope he does. 3/3
Honored and excited to become
@Groundwork
's next executive director!
Our work is more important than ever as we emerge from a massive economic crisis & fight for vital investments to support the workers, families, and communities who drive our economy.
It’s normalized price hikes and let companies use inflation as a screen for even more price hikes than those justified by their rising costs alone (that’s why profits and profit margins are up). 2. Corporate taxes are pretty close to rock bottom. 2/3
The good news is there are tough actions that policymakers can take – through stricter laws and rigorous enforcement. President Biden has taken important steps to address anti-consumer behavior in industries like meatpacking and oil. We can do even more. 9/12
"Multiple employees at an Applebee's in Lawrence, Kansas, quit over the email, and the location was closed briefly Tuesday amid a walkout." Jake Holcomb, a manger who quit, distributed copies of the email to employees & posted it online.
@businessinsider
There is zero incentive to stop gouging if you get to keep almost all of your winnings. 3. The labor share clearly has room to grow which means workers actually have a lot more room to run. Higher wages would be totally consistent with stable prices. Profits should come down.
Why isn't Congress delivering solutions that help families & workers? Because policymakers write bills to satisfy the scorekeepers, not their constituents.
I close out this month's
@TheProspect
issue with a personal story & some solutions. A thread 1/11
HB Fuller, an industrial supply giant, said that even as costs decline, the company expects "sizable margin expansion" (read: bigger profits), because of "extremely sticky" prices. Price “stickiness” is when prices stay roughly the same even as the company's costs change. 4/12
2. This is a big piece of the unfinished business of Bidenomics. You can’t credibly claim a rebuke to Reaganomics until you unwind its centerpiece—the 40 year one-way ratchet on tax cuts for the wealthy and corporations that has spiked inequality and drained our revenue. 2/4
Summers on
@ezraklein
: "I think it’s, frankly, ridiculous to take businesses saying on an earnings call that they have pricing power as some kind of evidence of perfidy."
The WHOLE point is that they are telling the truth.
(also they can't misrepresent material information) 1
-We've overreacted to inflation in the past & shouldn't raise rates.
-The right is weaponizing inflation to tank Biden.
-There are bright spots in the economy.
-Biden didn't cause supply chain problems.
None of these require denying the existence or impact of inflation.
This strategy is especially widespread in the food industry, where grocery prices jumped 13.5% in August. Hormel, the Fortune 500 food giant, said, "The pricing that we’ve taken & that we’re in the midst of executing the additional price increase... will by & large stay.” 6/12
People often ask me how we do such great communications work w/o a big comms firm on retainer. This is my answer. The big public affairs firms simply aren't capable of running a successful campaign to take on corporate power. Why? Their highest-paying clients won't have it.
NEW: Amazon hired a top Democratic firm, Global Strategy Group, to help bust the union drive by
@AmazonLabor
. They failed.
Today, GSG disavowed their work for Amazon: "We deeply regret being involved in any way"
@GSG
desperately wants this scandal to go away. But it's not. 🧵
4. It’s the right thing to do to strengthen our economy & democracy. The 40 year one-way ratchet is a big reason why the wealthiest Americans & corporations have way too much power in our economy and in Washington. They want the status quo. Biden should say he’ll disrupt it 4/4
“‘Greedflation’ is a problem for central banks now, with Richmond Fed’s Barkin worried that corporate price hikes are baked into the system.”
I’m old enough to remember when greedflation was a conspiracy theory.