Profit Margins And Inflation
Some pundits argue that America’s recent inflation is caused by corporate price gouging. I find that claim to be rather implausible. Why would corporations suddenly choose to engage in price gouging in 2022?
Why not 2017? Or 2012? So I decided to check the national income accounts. Here are the percentage changes from the 4th quarter of 2021 to the 4th quarter of 2022 (all nominal variables):
National income: +6.8%
Labor compensation: +7.1%
Capital (and proprietor) income: +0.9%
Corporate income: + 1.2%
What am I missing? Why would this data lead people to believe that profit margins are the major factor driving inflation?
More By This Author:
What Missing Workers?
Alternative Approaches To Monetary Policy
FDIC And Small Banks
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