Bloomberg: Inflation Story Spun by CEOs Is Debunked by Fat Profit Margins

From the Speaker's Press Office:

The jig is up – corporate earnings calls are revealing the hidden culprit behind the rising prices facing Americans: big corporations are raking in more cash than ever – squeezing working families and jacking up inflation with their price gouging and profiteering.

House Democrats passed the Build Back Better Act to bring down costs, put more money in working families' pockets and ensure big corporations pay their fair share, but Republicans voted to keep prices high and protect corporate profits at working families' expense.

See below for key points from Bloomberg's coverage of the staggering corporate profits behind rising prices for Americans.

Bloomberg: Fattest Profits Since 1950 Debunk Wage-Inflation Story of CEOs

• In the past two quarters, U.S. corporations outside of the finance industry posted their fattest margins since 1950 -- one reason why stock markets keep hitting all-time highs.
• On earnings calls, plenty of executives complained about the squeeze from rising costs of labor as well as materials. But overall, profits were up 37% from a year earlier, according to data out last week from the Commerce Department.
• At Deere & Co., for example -- the tractor maker that's seen the highest-profile strike of the pandemic -- workers held out to get a 10% raise, yet the company is still expected to earn even more next year than the record profit it posted Wednesday.
• U.S. consumer prices rose 6.2% in the 12 months through October, the most since 1990. The new data on corporate earnings suggest business can comfortably pass on all its higher costs, which means there may be more inflationary pressure to come.
• "If profits are strong, there's going to be continued demand for workers, and in a tight labor market there's going to be continued upward pressure on wages and compensation," says Robert C. King, director of research at the Jerome Levy Forecasting Center in Mount Kisco, New York.
• What all of that shows, says King, is a strong economy, not one that's about to be tipped into recession by surging prices. As for how that growth gets shared out, King acknowledges there'll be local fights between labor and capital but reckons that, overall, the idea is "somewhat an illusion" – because when firms dole out cash to workers, they generally hand it right back.
• Wholesale [gas] prices actually fell in recent weeks but the price at the pump "hasn't budged a penny," the president said Nov. 23. If that margin had held in line with historical norms, "Americans would be paying at least 25 cents less per gallon right now as I speak. Instead, companies are pocketing the difference as profit. That's unacceptable."
• In the near term, there's likely enough fuel in the economy already to sustain the demand that creates jobs and boosts pay. Households have cash saved up. Companies have earnings they can invest. Much of that is down to macroeconomic policy, but efforts by workers themselves make a big difference too. At Deere, they did – and the company's high profits likely played a key part.
• "Workers may be tired of seeing the fruits of their labor go to corporations making record-breaking earnings," Chris Rhomberg, a professor of sociology at Fordham University, said at that point.