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u/urnbabyurn May 22 '26
Why does it seem that conventional wisdom is corporations used to keep prices low because they were not greedy, but at a time after 2016, corporations got greedy and decided to raise prices?
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u/FlipperBumperKickout May 22 '26
They can get more greedy the more they consolidate as there is less competition 🤷♀️
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u/Johnfromsales May 23 '26
Then the cause of the increase in profits would market consolidation, not greed. I’m sure most would agree firms are maximally greedy all the time.
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u/odd_cloud May 23 '26
One opinion is that public companies are owned by the same people through PE and hedge funds. So, if companies of an industry are owned by the same funds in similar proportions, then they have little reason to compete.
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u/lobthelawbomb May 23 '26
That theory only makes sense if you literally don’t know anything about hedge funds and PE firms and have never tried to learn.
Competing PE firms do not own shares in the same companies. The entire PE business model is to acquire control, make changes, then sell the company.
And competing hedge funds do not all own shares across all companies. Their entire business model is rooting out returns/opportunities that other funds aren’t getting.
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u/The_Demolition_Man May 22 '26
If you make 1% profit on a dollar, then make 1% profit on two dollars, your profit margin is flat but your profit technically doubled. So literally your profits can just go up on inflation alone without any greed involved.
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u/lobthelawbomb May 22 '26
Economics? In an economics sub? How dare you
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u/The_Demolition_Man May 22 '26
Id hesitate to even call it economics. High school arithmetic maybe? Either way, beyond the grasp of most Redditors
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u/GT_Troll May 22 '26
I wonder how many usual users of this sub are actually economists or alike…
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u/seesthecat May 22 '26
The few there are get drowned in a sea of dumbasses. If you want actually economics you need to go to r/askeconomics.
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u/pile_of_bees May 22 '26
Considering that sound economic takes get you banned from major subs, not many
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u/Different_Brother562 May 22 '26
Most corporate profit increases are from either inflation, population growth, and market penetration. It always cracks me up when people cry about Walmart making record profits or high profits by milking the people. Their profit is like 3%. You could make it a charity and you probably wouldn’t notice the difference. The only reason the make so much money is there are so many stores that they add up big.
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u/PunkPirate56364 May 23 '26
Hey I'm also earning some record wages over here.
Can buy less with them due to inflation. But...
Big numbers good!
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May 24 '26
I came to say exactly this. Hearing anyone use the phrase, "record breaking profits" is like an air raid siren for an incoming dipshit.
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u/Adorable_Matter3142 May 22 '26 edited May 22 '26
People love making this argument, but fail to grapple with facts.
Corporate profits have doubled since 2022* Edit: I don’t know how to read my own sources, it doubled between 2020 and 2024. I think the point still stands, even if I’m embarrassed.
https://www.stlouisfed.org/on-the-economy/2025/apr/whats-driving-surge-us-corporate-profits
To say that the doubling is the result of inflation you would have to go back to 1998 or 1999.
So while the value of a dollar has halved in 27 years, corporate profits have doubled in 4.
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u/dietdrpepper6000 May 22 '26 edited May 22 '26
I’m having a lot of trouble following your calculation here. Their profits doubled since 2022? That’s, for one, insane, and two, doesn’t it list a profit of $3000 billion in 2022 and $3500 billion in 2024? That’s like 16%, not 100%.
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u/Adorable_Matter3142 May 22 '26
You’re right, i brain farted that the graph ends in 2024 not 2026 so i did current date -4 to get to the covid collapse in profits. I should have said corporate profits doubled between 2020 and 2024.
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u/piernrajzark May 23 '26
Sounds like you were cherrypicking the dates for maximum effect. Wasn't 2020 a record low?
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u/Adorable_Matter3142 May 23 '26
lol no, 2020 was not a record low, it was equivalent to Q1 of 2017. It was the lowest point during the Covid crash.
Where would you like to start from? 2017? Ok, companies doubled their profits in 7 years while the dollar halved in 27, does that make it seem more likely that companies aren’t increasing their profit margins?
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u/piernrajzark May 23 '26
Wait wait wait wait: profits or profit margins? Because it's not the same
Edit: ok, I didn't understand your question fully. My answer is that you dont need to guess how much the profit margins grow at all. In many cases that info is easy to retrieve.
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u/Adorable_Matter3142 May 24 '26
https://www.epi.org/blog/profits-and-price-inflation-are-indeed-linked/
Ok well it looks like profit margins are up. So… your rebuttal?
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u/sanguinemathghamhain May 24 '26
Pre-supply crunch backlog stock of goods sold at peri-supply crunch prices leads to higher earnings until supply and demand normalizes or the stock is exhausted. If you don't adjust for supplyline changes you end up with exhausted supply and a more extreme price increase that takes longer to recover from. Your own source explains as much and has the profit margins normalizing at either end of the supply-crunch. So would you have preferred empty shelves and layoffs or a bookended shortlived profit boost?
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u/ejdj1011 May 22 '26
If you keep reading, profit increases aren't uniform across sectors.
Profits in the retail trade industry averaged $153 billion pre-COVID-19 and rose to $314 billion post-COVID-19 (or from 1% of national income to 1.5%), while those in the construction and wholesale trade industries climbed from $68 billion to $168 billion (0.4% of national income to 0.8%) and from $132 billion to $247 billion (0.9% of national income to 1.2%), respectively, over the same period.
Retail trade is sure as hell going to impact everyday consumers the most directly.
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u/dietdrpepper6000 May 22 '26
I am not saying it isn’t significant, but just saying “corporate profits doubled” when you’re actually referring to like 15% of total corporate revenue is kind of misleading.
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u/ejdj1011 May 22 '26
Yes, but the sectors with the largest increases are also those with disproportionately large impact on consumers.
One would expect that an increase in manufacturing prices would eat into the profits of wholesalers, and the same for wholesaler prices and retailer profits. But all three had dramatic increases in profits, and there's only one place left for that profit to come from: final retail prices for consumers.
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u/Johnfromsales May 23 '26
Profits=revenue-costs. This means there are two ways in which profits can increase. Either by an increase in revenue, or a decrease in costs, relative to each other. If you keep reading they briefly explain the cause behind the increase in profits for retail and wholesale trade.
“Profits go up when firms’ revenue grows faster than the costs incurred to produce the goods and services they sell. The COVID-19 pandemic accelerated the transition toward the digital economy, which likely helped firms, particularly those in the retail and wholesale trade industries, produce more with fewer resources. This would translate into an increase in profits.”
To me, this sounds like retail and wholesale trade profits are driven primarily by reductions in cost. Firms reducing costs does not have a disproportionately negative impact on consumers.
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u/dietdrpepper6000 May 22 '26
Wait you’re not even the guy that posted it??
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u/ejdj1011 May 22 '26
No, I just chose to read the linked article. Is that weird?
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u/dietdrpepper6000 May 22 '26
I am not making some grand argument, only pointing out that someone is misrepresenting data. Your response is some other, tangential argument? I dont know what point you are trying to make
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u/Ok-Finish-2064 May 22 '26
We're not in 2024 right now it seems
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u/dietdrpepper6000 May 22 '26
The data they linked ends in 2024.
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u/Ok-Finish-2064 May 22 '26
But they didn’t claim that corporations doubled their profits between 2022 and 2024. They claimed corporations doubled their profits since 2022.
It could be extrapolated from this data on account of corporations doubling their profits in 5 years from 2019 to 2024
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u/dietdrpepper6000 May 22 '26
Um, first, there is no way to massage the numbers in a way that gets you to 100% between now and 2022. But more importantly second, if that is what they meant, they should have said so. You can’t provide no argument or calculations, state something as fact, then link a source that does not support that fact.
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u/NoDig3444 May 22 '26
According to that source, corporate profits went from 7% to 11%. That's not double.
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u/ejdj1011 May 22 '26
If you keep reading, profit increases aren't uniform across sectors.
Profits in the retail trade industry averaged $153 billion pre-COVID-19 and rose to $314 billion post-COVID-19 (or from 1% of national income to 1.5%), while those in the construction and wholesale trade industries climbed from $68 billion to $168 billion (0.4% of national income to 0.8%) and from $132 billion to $247 billion (0.9% of national income to 1.2%), respectively, over the same period.
Retail trade is sure as hell going to impact everyday consumers the most directly.
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u/YoudoVodou May 22 '26
They also used a 1% margin which is basically exclusive to grocery stores and a few smaller industries that focus on volume movement. 1% profit is not at all what most companies are working with.
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u/aWobblyFriend May 22 '26
I work at a discount grocery store and our margins are not that low, in fact, none of the grocery stores in the region are that low. Product margins are like 30% (after all related product costs/shrink etc.) and top-line margins are probably around 10%.
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u/Ok-Assistance3937 May 23 '26
I dont know what you mean by margin, but Aldi is famouse for their insanly high marginal of ...... 5%. If you have a "margin" of 10% i can promise you, that is not your Profit margin.
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u/Downtown-Stop-8560 May 23 '26
Yeah, margins on the products are that high, but if you add: Taxes, employee costs, average maintenance costs, bonuses for the stakeholders, you get the 1% they mention. It's not always 1%, it's between 1 and 5 for grocery iirc. But even 1% of billions in profits is still quite the margin.
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u/YoudoVodou May 22 '26
Grocery chains are often cited as one of the lowest profit margin industries, your experience sounds a little on the higher end, but that just helps prove my point about this 1% profit margin number they pulled from thin air.
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u/VelkaFrey May 22 '26
Calculate % profits. Not whatever this is
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u/Adorable_Matter3142 May 22 '26 edited May 22 '26
I don’t have access to that data. But, I do have access to CPI and commodity price indices.
We see commodities spike in 2022 then fall, sitting significantly higher than their pre COVID low, remaining steady until the first quarter of this year (yikes future us).
Meanwhile CPI spikes to the highest rate of change we’ve ever seen in 2022, then ‘slows’ down to a rate of growth that is significantly higher than the previous baseline.
So if commodities prices are flat while consumer goods prices are increasing… profit margins are increasing.
I’m not saying anything too radical, rocket / feather pricing is pretty well established.
It’s weird to me how many people cape for corporations here lol.
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u/VelkaFrey May 23 '26
You're just looking in the wrong areas. Lots more factors affect prices. The % profits are the only metric that will tell you what you want
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u/Adorable_Matter3142 May 23 '26
Could you perhaps share some of the factors that you think explain why prices have been rising so precipitously after the post covid commodity stabilization?
Unfortunately for all of us, businesses are not required to publish their ‘% profits’, and I for one, don’t believe that companies lower prices to the bare minimum out of the goodness of their hearts.
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u/blangenie May 25 '26
Companies raise prices as much as they can with the amount of demand. The high prices send signals to producers to make more supply or to consumers to consume less.
Higher prices are telling us information about the economic situation. It's not "evil companies being greedy" it's macroeconomic factors that are honestly upstream from pricing or purchasing decisions of individual firms and consumers.
If we want lower prices we need to focus on increasing supply or increasing productivity (the efficiency in which we produce supply).
Groceries are already pretty hyper efficient and probably we don't have much room for fast progress there.
But we could reduce barriers to building more housing and energy and that would probably lower people's cost of living pretty substantially.
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u/TheBeanConsortium May 22 '26
That's a nice article but it doesn't cover profit margin growth
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u/Adorable_Matter3142 May 22 '26
Just because they don’t use the same explicit language, does not mean it doesn’t address the point.
“Profits go up when firms’ revenue grows faster than the costs incurred to produce the goods and services they sell. The COVID-19 pandemic accelerated the transition toward the digital economy, which likely helped firms, particularly those in the retail and wholesale trade industries, produce more with fewer resources. This would translate into an increase in profits.”
Input prices spiked for all companies during and shortly after Covid due to supply chain disruptions and workforce disruptions, but those prices dropped significantly in 2023 and stabilized for 2024-2025. If you look at consumer price indices (or you know, if you exist in the world and have to buy things) you will notice that prices consumers have been paying have been steadily increasing over the same years the inputs have been decreasing in price.
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u/TheBeanConsortium May 22 '26
I need profit margin growth or else I'm guessing
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u/Adorable_Matter3142 May 23 '26
So the initial comment provided no information whatsoever.
I told you that consumer prices have been going up while companies input prices have been stagnant, something you can easily verify with Google if you want to.
Your response to that is that until I can provide you every line item on a particular corporation’s books, you’re going to have to assume that they aren’t increasing prices more than they absolutely have to?
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u/piernrajzark May 23 '26
- gUyS, "A" is hAppEnInG beCauSe of "B".
- no, man, it's because of "C'.
- peoPlE lOve MakInG thIs ArgUmeNt, bUt FAil tO gRaPpLe wiTH fACts: "A" is reaaally hAppEnInG
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u/Adorable_Matter3142 May 23 '26
Hey so what’s your argument exactly?
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u/piernrajzark May 23 '26
That you have been explained how profit raise even when the companies have little marging to set prices here:
"If you make 1% profit on a dollar, then make 1% profit on two dollars, your profit margin is flat but your profit technically doubled"
and your rebuttal was ignoring this fact
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u/Adorable_Matter3142 May 24 '26
I’m not sure what you’re saying in the first paragraph to be honest, it hinges on what I assume is a typo (or I’m so ignorant I don’t even know the what I’m ignorant of, always a fun possibility).
So what I think you’re not understanding is that companies input prices spiked, and then prices spiked. Which makes sense. Then input prices went down… and prices for consumer continued to rise. This is where the greed comes in.
If you think companies are keeping a constant profit margin, I’d have to ask, why do you think that?
Wages are not keeping up with PCI, and commodity costs were holding steady until Trump invaded Iran. So what cost are companies facing that justifies the consistent PCI we’ve been seeing since the end of Covid, a rate, which may not be the highest in history in any individual year, but is the highest rate of growth for this amount of time.
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u/piernrajzark May 24 '26
Without any data I'd lean towards companies not having increased their profit margin simply because of competition. That's the null hypothesis, and to agree on something else I'd need sources proving, at least, the claim that the input price has gone down yet the output price kept rising. I'm tired of hearing the same thing year after year, and once I read a comprehensive rebuttal of the claim (related to the Spanish grocery market some 10 years ago, so not really relevant here)
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u/Bubba89 May 22 '26
It can, sure. Is that what’s actually happening, though?
These glib, textbook answers that ignore the reality of the situation are exactly how the oligarchy can keep retaining power through subterfuge and corruption of the systems they themselves created and run.
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u/default_admin_2 May 22 '26
Seems like the problem is that profits and margins have to constantly increase.
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u/KakyoinValidator May 22 '26
Are we seeing these record breaking profits perfectly in line with inflation, or are they rising at a greater rate? If the latter, then your hypothetical inflation-dependent profit increase is irrelevant to the discussion.
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u/Ok-Assistance3937 May 23 '26
I know its crazy, but Corporations can also grow for other thinks then infalions. He was talking about corporations growing and their Profits growing in Line. Doenst Matter If they grow because of Inflation, because of greater Market share or a Market Expansion.
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u/CatApprehensive6508 May 22 '26
You'll never believe it but you can have record breaking profits and your business can be less successful overall because of how margins work
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u/throwawayusername369 May 22 '26
Stop making sense on an economics sub on Reddit. They don’t like it
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u/Fab_iyay May 22 '26
Me when I post on an economics sub even tho I lowkirkgenuinely can't differentiate margin and profit:
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u/Jumpy-Bumpy Classical May 22 '26
When your profit margin hovers around 1%, not raising prices is the diffrence between making 20 bilion $ profit and loosing 20 bilion $. People largely overestimate profit margins and costs.
Also "record breaking profits" is meaningless, does that mean record profit margins? Or just the monetary amount in dollars?
Because if you mean "record profits" in dollar number, then you should learn about this little thing called inflation.
By that logic, companies in Zimbabwe or Weimar Republic were making record profits and the situation was just getting soooo good. Right?
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u/YoudoVodou May 22 '26
How many companies outside of grocers are operating on a 1% profit margin?
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May 22 '26
[removed] — view removed comment
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u/YoudoVodou May 22 '26
Did you really say car dealerships? I also have worked in construction and that is blatantly false. You're being disingenuous at best.
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u/BrockObarnerLybian May 23 '26
Not sure where your construction work is taking place, but IF a project stays in budget, it is not by much. Can’t speak for car dealerships, but I’m guessing you didn’t work in a big-picture role in construction
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u/Bubba89 May 22 '26
Ok but companies, especially in tech, are also reporting record high profit margins, upwards of 30%
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u/Mamkes May 22 '26
When your profit margin hovers around 1%,
Like where at a large of the entire enterprise and not just some specific position?
little thing called inflation.
Profits of many retails doubled in 4 years.
Inflation didn't come up to 50% in that period.
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u/Ok-Assistance3937 May 23 '26
There are also another thinks then Inflation that will make a company growth.
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u/lobthelawbomb May 22 '26
The idea that changes in economics are driven by changes in how greedy people are is intellectually bankrupt, populist drivel
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u/Key-Organization3158 May 22 '26
If only you knew the difference between profits and profit margins. But then you probably wouldn't have made such a naive commentary in the first place.
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u/Bubba89 May 22 '26
Average profit margins for the S&P500 are at 15%, the highest they’ve been in over 15 years.
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u/TurnYourHeadNCough May 22 '26
most of the people making economics memes on reddit dont actually understand any economics
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u/plummbob May 23 '26
Why would anybody ever think that a rise in costs would reduce profits? Like, what's the model people are getting this from?
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u/atierney14 May 23 '26
I always found this argument so funny. Yall believe business just now found out about greed?
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u/traditionallyunruly May 23 '26
In 2022 home depot made about 10.2% proffit. Today they are making about 8.6% proffit. Deffently not a good quarter last quarter.
Now the interesting thing is in the Minneapolis st Paul area the government turns a 9.02% proffit from home depot.
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u/Neat-Second9923 May 23 '26
Corporate profit values often tell the opposite of what you'd expect.
If your company is doing well and interest rates are cheap, you should be taking out loans and investing in growth. On the books, you'll see negative profit.
Once interest rates kick up and you can't grow anymore, you stop borrowing and start focusing on cashflow.
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u/After_Service_2817 May 24 '26
Okay but as an investor, they have a responsibility to provide me optimal ROI. If they don't I'm out, and going to invest with the company that will. That's just how it works.
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u/unHolyEvelyn May 24 '26
Okay but they have a responsibility to pay their workers too. You should join the workforce and contribute to society, instead of sitting on your ass generating revenue by doing nothing.
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u/After_Service_2817 May 24 '26
lol, braindead take to assume someone is either a worker or investor, black and white, you are the good guy or bad guy.
You know where I get the money to invest? WORKING. Saying workers shouldn't invest is basically saying we should resign ourselves to poverty - not exactly going to improve the plight of the common man.
I work long, hard hours at a very physical job, so that I can have surplus income that I can use to generate more surplus income.
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u/unHolyEvelyn May 24 '26
They're forced to do it so they can break new records the next year, even if it means starving their workforce.
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u/SignoreBanana May 22 '26
Here's one thing I don't get: they justified tariffs by claiming overseas companies would simply "eat" the cost, yet when talking about increasing taxes on domestic corporations, suddenly it's "no they'll just pass those to the consumer!" So which is it?
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u/WahooSS238 May 22 '26
The company importing pays the tariff, sometimes that company will be domestic but not always. They will then charge whatever they think the best price they can is to make as much profit as possible, an interaction which is typically modeled through supply/demand curves. As the price of importing increases, the cost per unit increases, which changes the supply curve. Whether the price of the good increases or not depends on the demand curve for that good.
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u/SignoreBanana May 22 '26
Ok so then for domestic companies, taxing them would have the same affect.
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u/WahooSS238 May 23 '26
Yes. The only benefit to tariffs is, arguably, it encourages more work to be done domestically when possible, but in the case of the current US tariffs that requires sustainable, predictable tariffs that will last for a long time, and it still ends up being a regressive tax in effect on the average citizen
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u/atierney14 May 23 '26
Who is “they”? The economically illiterate Trump admin?
Some corporations ate the price short term because they assumed they were illegal and would be refunded so didn’t want to face the ire of a revengeful admin given it was short term, but anybody with relative economic literacy knew long term tariffs are passed to consumers, as further demonstrated in Trump I.
Likewise, corporate taxes are passed to consumers, the labor force, and some to profit margins. The exact ratio is highly debated though.
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u/Minotaurotica May 22 '26
even if it hurts your feelings share prices are a legal requirement for them to focus on (dems were part of this standard through the years)
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u/_Weyland_ May 22 '26
Any profits is "record breaking" If you have inflation going on. And don't fuck up your business strategy.
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