WSJ: Why Is Inflation So Sticky? It Could Be Corporate Profits

[ZachJump]

Walmart sales have gone up 151% since 2009. Profit has gone up 147%.

Target sales have gone up 168% since 2009. Profit has gone up 140%.

Kroger sales have gone up 195% since 2009. Profit has gone up 180%.

Amazon sales have gone up 2019% since 2009. Profit has gone up 4070%


Not saying some companies are not over pricing, but the first three leading retailers I looked up, profit has under performed sales.

Amazon...ok profit has outperform sales. Lot less capital investments these days by Amazon compared when they were spending money as fast it came in to build their current day infrastructure.

Kroger sales increase is primarily driven by acquisitions.

 

[DogBoyRy]

Exxon's 1Q profits were close to $11.5 billion -- about $2.5 billion more than the year before (if you include the write off). It was reported as a record profit quarter.

Record first quarter is different than record quarter.
Just sayin.

 

[Titus Andronicus]

Well, duh. Every for-profit organization sets profit goals, and heads will roll if they aren't accomplished. This is like pointing out that the sun rises every day.

Prior to the pandemic, I was seeing any number of articles about companies watching their profit margins decline and being unable to raise prices. Consumers had become so price-sensitive that sales would instantly drop after any price increase.

I remember talking to a woman from Alaska Airlines who was telling me that their loyalty program was simply not performing. Their members were so price sensitive that they would throw Alaska Airlines flights to the curb just to get a ticket to Las Vegas that was ten dollars cheaper. They would rather save $10 than build up AA Miles.

I was also noticing lots of mini-price wars at the supermarket across the entire spectrum of products. (I think the whole logistics thing with raw materials being ordered in advance was resulting in a glut of finished product in the makers and distributors warehouses ... and this stuff was being discounted just to move it out ... and these discounts were being passed on to consumers.)

In any event, if you were in a notoriously low margin business, you were struggling.

.........................................

Then ... we had a toilet paper shortage and the world shifted beneath our feet. The mindset is different, and people are now stocking up at home rather than shopping with a frugal mindset. (Rather than engaging in Just-in-time shopping) Price increases are sticking after years of this not being the case.

Who caused all of this volatility? The only disruptions I can see all came from government. Low interest rate policies, low wage policies, open immigration, wildly swinging tax rates with no continuity and on and on. Energy independence followed by heavy dependence on foreign supply is a biggie also. Spending money before it is earned (at all levels of private and government enterprise) is probably the biggest culprit.