Corporate leaders and right-wing pundits are repeating for months the false claim that the U.S. has experienced inflation due to social spending policies supported by progressives and the Biden administration. New data shows that inflation is increasing largely because corporations want it so.
Businesses outside the finance industry have enjoyed the largest profits gains since 1950 during the past two quarters. 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.
Many corporate executives have complained about the rise in costs of raw materials and other goods, which was a common complaint heard during earnings calls with stockholders. However, data suggests that corporations could absorb those costs and still make huge profits, thereby reducing inflation in the US.
Instead of pointing out this possibility corporate allies in Congress have been spreading disinformation about where the inflation originated, claiming that stimulus bills and social welfare programs 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 group that promotes an agriculture system that works in everyday life.
More Perfect Union, a social welfare organisation, stated that corporations were using inflation to raise prices. This means that corporations used the situation to raise prices significantly when the economy reopened and the price of goods increased a little.
“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.