Corporations are making billions in profits while consumers pay price of inflation

On average, the top 100 companies in the United State saw their profits rise by 49%, according to a report by The Guardian.

 

The economic rebound from the pandemic and supply chain shortages have been driving factors for inflation, causing the Federal Reserve to raise interest rates.

One would figure the added costs would be driving up prices for corporations and leading to lower profits. A recent analysis by The Guardian found that profits for the top 100 companies in the U.S. are up on average 49%. This means consumers are absorbing the higher costs while corporations — and their shareholders — are reaping the benefits.

Detroit-based journalist Tom Perkins wrote the story. He says people see a big difference in how much they’re paying at the grocery store, but the cost of goods often reflects the bottom of the supply chain.

“You don’t have to look any further than a gas pump to get to get a good sense of how they’re doing,” Perkins says. “Their profits are skyrocketing. And grocery stores are a little bit of a different story because they’re further down the supply chain. They have their suppliers who are passing costs on down to them. And they’re a little bit more pinched in what they can do. They can’t really raise prices that much higher than they’ve already been raised as they’re coming from a producer like Kellogg’s or General Mills who actually have higher profits than most grocery stores.”


Listen: Tom Perkins discusses companies’ soaring profits amid rising inflation.

 


Russ McNamara, WDET News: Some sectors like meatpacking, housing and oil have just a few companies controlling the market. Is there any evidence they’re intentionally keeping the prices and profits high?

Tom Perkins

Tom Perkins: Yeah, quite a bit of it. And the earnings calls that I reviewed, especially across the oil industry, you see a lot of comments from analysts saying things like, ‘We really need you to keep the supply low and keep the prices high.’ There’s really a lot of discussion of keeping production low for the next couple of years, keeping it flat, keeping it at the same level that it’s at right now. Because if you start flooding the market with more oil, then prices are gonna go down and Chevron and BP and everybody else isn’t gonna make quite as much money.

As for the meat packers….

You have basically four or five major meat producers in the U.S. and their profits are shooting up. Tyson, their profits are up something like 40 to 50%. And they’re raising prices by 30% on beef. And you really got to ask ‘Do they need to raise prices 30%?’ if their profits are up that much, but you know what, they can get away with it. They don’t have many competitors who are going to come in and undercut them.

And housing?

Same with housing. Two of the major new home builders are (formerly Detroit-based) PulteGroup and Lennar. And Lennar’s CEO — during one of the company’s recent earnings calls — said something to the effect of ‘We could be doing about 1,000 more new home starts each quarter. But, why would we do that? That would drive down the price of new homes, which at this point are, on average, above $500,000,’ [which is] out of reach for most Americans. In these industries where you see a lot of consolidation, there’s definitely what seems to be a pretty clear effort by companies to jack up prices.

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Author

  • Russ McNamara

    Russ McNamara is the host of All Things Considered for 101.9 WDET, presenting local news to the station’s loyal listeners. He's been an avid listener of WDET since he moved to metro Detroit in 2002.