Even with today’s slowdown, profit growth remains a big driver of inflation — run75441

This is a brief and targeted commentary by EPI’s Josh Bivens to which I have added input. The Fed has been flailing away at the economy in the belief Labor is the issue. Josh contends, product or profit markups have been a major issue. He does provide a foundation for his posit.

I look to the supply chain issue(s) as the basis for the higher profits. I experienced similar in getting componentry in 2008-2010. With less supply and a lengthen (and silly lead times) lead time, companies increased prices not due to cost but because they could on items like semiconductors. I was the guy on th other end of the phone listening to the excuse for a higher price. They raised prices because they could and this component was specified by automotive. The manufacturer knew it and we knew it.

It took a while for the market to normalize. I believe we will see similar shortages before a return to normalcy in today’s environment.

I do not make a major case for supply chain here. Instead I concentrate on Josh’s points....

Angry Bear
Even with today’s slowdown, profit growth remains a big driver of inflation
run75441