Right. The highest corporate profits in more than 70 years have nothing to do with it.
I think when the article says “pandemic-era inflation was largely supply-driven” users are somehow reading “pandemic-era inflation was only supply-driven” and that’s… Well… Not what is being said.
It’s obvious that my point is Brookings is deliberately ignoring the elephant in in the room. They are turning a blind eye to extreme corporate price gouging and record profits, in fact Brookings didn’t mention those things at all.
Thinking and critical analysis requires awareness of what is deliberately being omitted by a media source as well as what is being said. It has nothing to do with “somehow reading” the article wrong.
Corporate price gouging has not been a primary driver of U.S. inflation, according to research published on Monday by economists at the Federal Reserve Bank of San Francisco.
While markups for motor vehicles and petroleum products did rise sharply during the 2021-2022 inflation surge, markups across the entire spectrum of U.S. goods and services have been relatively flat during the post-pandemic recovery, the bank’s latest Economic Letter showed.
“As such, rising markups have not been a main driver of the recent surge and subsequent decline in inflation during the current recovery,” wrote the bank’s research chief Sylvain Leduc and colleagues Huiyu Li and Zheng Liu.
So we’re supposed to believe that the highest corporate profits in more than 70 years are not a primary driver of inflation? I don’t buy it and neither do all economists.
It is unlikely that either the extent of corporate greed or even the power of corporations generally has increased during the past two years. Instead, the already-excessive power of corporations has been channeled into raising prices rather than the more traditional form it has taken in recent decades: suppressing wages.
Corporations have such excessive power that they can even push the narrative that their historic profits don’t have anything to do with inflation. Some people actually believe the propaganda.
I don’t think you read this article correctly… They say inflation was driven by a combination of factors, including the one the brookings article says is the primary driver. All 3 articles (Brookings, Reuters, and epi) agree more than you are presenting. EPI says corporate profits have abnormally contributed to inflation, not that they are a primary driver.
In short, the rise in inflation has not been driven by anything that looks like an overheating labor market—instead it has been driven by higher corporate profit margins and supply-chain bottlenecks.
Your link does not support your claims and does not refute the ideas presented in any article here, as you seem to want (I also don’t know who is saying all economists think something…)
Profit margins may not be telling us that very recent increases in corporate power are the root cause of inflation. But they are telling us that a simple macroeconomic imbalance of supply and demand is not driving inflation either, unless the relationship between a “hot” economy and profit margins and real wages is just coincidentally behaving entirely differently in the current recovery than it has in the past.
So is it a supply chain issue or a monetary issue? Which experts to believe 😅
I don’t think your article poses this as an either/or decision, but more pointing out how money supply wasn’t mentioned in other sources. There isn’t any analysis disproving the Brookings article from my read.
The COVID-19 inflation shock was initially seen as a sign of overheating, with many viewing the Federal Reserve as dangerously behind the curve.
But given unprecedented supply chain disruptions, it is increasingly consensus that pandemic-era inflation was largely supply-driven.
Firms’ margins have only begun to normalize, underscoring the long-lasting effects of COVID-19 disruptions.
We expect inflation will keep falling, given the importance of lagged disinflation effects from supply normalization.
Brookings Institute Media Bias Fact Check Credibility: [High] (Click to view Full Report)
Name: Brookings Institute Bias: Left-Center
Factual Reporting: Very High
Country: United States of America
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