Why is inflation so sticky? It could be corporate profits
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Re: Why is inflation so sticky? It could be corporate profits
#2> “We do have to think about pricing differently,” said Ms. Weber. “A cost shock, or bottlenecks can create an implicit agreement among firms that raise their prices, so they can expect others to act likewise.”
Interesting theory. I've definitely seen some restaurant surcharges from COVID stick around even as they have fully opened.
Re: Why is inflation so sticky? It could be corporate profits
#3It's a likely theory.
But economics teaches us when a player overcharges, others will step in to undercut and take all the market share.
So, we're at a point where we need to admit that mantra isn't true in the modern age, or admit that we've done a terrible job at preventing effective monopolies/duopolies from forming.
Re: Why is inflation so sticky? It could be corporate profits
#4Re: Why is inflation so sticky? It could be corporate profits
#5It's a likely theory. But economics teaches us when a player overcharges, others will step in to undercut and take all the market share. So, we're at a point where we need to admit that mantra isn't true in the modern age, or admit that we've done a terrible job at preventing effective monopolies/duopolies from forming.
That is what the first two weeks of economics teaches.
The rest of the curriculum is about how wrong that is.
Re: Why is inflation so sticky? It could be corporate profits
#6[flagged]
Re: Why is inflation so sticky? It could be corporate profits
#7Why is this a good explanation now, when 6 months ago it was being pooh-poohed?
Take a look at the graphs in this article: https://www.politifact.com/article/2022/dec/10/what-do-high-...
The graphs lay out a clear picture of rising corporate profit margins, meanwhile the text is saying to "Ignore the man behind the curtain." What's different today that the WSJ can run this piece today?
Re: Why is inflation so sticky? It could be corporate profits
#8Why is this a good explanation now, when 6 months ago it was being pooh-poohed? Take a look at the graphs in this article: https://www.politifact.com/article/2022/dec/10/what-do-high-... The graphs lay out a clear picture of rising corporate profit margins, meanwhile the text is saying to "Ignore the man behind the curtain." What's different today that the WSJ can run this piece today?
Could be that price increases are remaining high, even as supply shocks have abated.
Re: Why is inflation so sticky? It could be corporate profits
#9It's a likely theory. But economics teaches us when a player overcharges, others will step in to undercut and take all the market share. So, we're at a point where we need to admit that mantra isn't true in the modern age, or admit that we've done a terrible job at preventing effective monopolies/duopolies from forming.
That is what the first two weeks of economics teaches. The rest of the curriculum is about how wrong that is.
Perhaps you went to a better school than I did.
I only did 101 and 102, but even then the professor always spoke in terms like we were some old village, probably to make things easier to understand. But obviously those analogies don't apply to the world today, mostly.
Re: Why is inflation so sticky? It could be corporate profits
#10> “We do have to think about pricing differently,” said Ms. Weber. “A cost shock, or bottlenecks can create an implicit agreement among firms that raise their prices, so they can expect others to act likewise.” Interesting theory. I've definitely seen some restaurant surcharges from COVID stick around even as they have fully opened.
This only works in an environment that's flush with cash. E.g. a decade long bull market with artificially low interest rates, 2018 tax cuts, and stimulus from covid. Was a perfect storm.