For months, corporate leaders and right-wing pundits have been parroting the dubious claim that inflation in the U.S. is due to social spending policies backed by progressives and the Biden administration. But new data demonstrates that inflation is going up largely because corporations want it to.
During the past two economic quarters, businesses outside of the finance industry have seen their largest profit gains since 1950. According to data from the Commerce Department, corporations’ profits increased by 37 percent during that time period, compared to data from the previous year.
By comparison, consumer prices in the U.S. increased by about 6.2 percent over the past year — the highest increase since 1990.
The costs for raw materials and other goods that companies may require did go up, a complaint made by many corporate executives during earnings calls with stockholders over the past year. But the data suggests that corporations could have absorbed those costs and still seen enormous profits, thereby reducing the inflation felt by American households in recent months.
But instead of pointing out this possibility, corporate allies in Congress have been promoting disinformation about where the inflation came from, claiming that social welfare programs and stimulus bills are to blame.
“Inflation is running rampant due in part to out-of-control spending from President [Joe] Biden and Speaker [Nancy] Pelosi,” House Minority Leader Kevin McCarthy (R-California) tweeted in July.
But just as most economists predicted earlier this year, stimulus spending didn’t impact the economy as much as lawmakers have claimed.
“The checks, while they helped, they didn’t lead to a boom in demand,” said Olivier Blanchard, a senior fellow at the Peterson Institute for International Economics, speaking to CNBC earlier this year.
Progressives took note of the new data released by the Commerce Department last week, highlighting that corporate greed seems to be the primary factor driving higher prices — not social spending, as many have errantly suggested.
“Let’s be clear. The problem is not the worker who got a small raise & a $1,400 check 7 months ago,” tweeted Sen. Bernie Sanders (I-Vermont). “The problem is corporations making record-breaking profits while 700 billionaires became $2 trillion richer during the pandemic. We need an economy that works for all, not the 1%.”
“Under the guise of inflation, large companies are swindling customers to boost their bottom line,” said Family Farm Action Alliance, an advocacy organization that promotes an agriculture system that works for everyday people.
More Perfect Union, a social welfare organization, said that corporations were using inflation as an excuse to raise prices. In other words, as the economy reopened and prices for goods went up a little bit, corporations used the situation to raise prices a lot.
“Corporations are seizing the opportunity to engage in massive profiteering because they can…they don’t care you have to pay more for your groceries,” the organization said in a recently released video.