The Inflation Thread

[LFC]

More on today's "inflation" a.k.a. profiteering.

[LFC]

More "inflation."

[goldenvalley]

War in Europe is profitable for oil companies.  Price of crude goes up, price of natural gas goes up.  Shareholders are happy and the company is probably buying its own stock too. And it all trickles down to us in the form of higher prices.  

[LFC]

The Fed just clearly stated that they're going to continue to fight inflation by squeezing the savings out of middle and lower class households. What a country we live in, where windfall profits from price gouging are protected and the savings of ordinary people are targeted.

Jon Schwarz, Mayor, Arkham MA
@schwarz

It's rare to see the Fed speaking this clearly about how it works, but here the president of the Kansas City branch says Americans have too much money and that's a problem the Fed's going to solve.

www.npr.org/2022/11/02/1133195996/fed-federal-reserve-interest-rates-hike-increase-inflation-unemployment-powell

[goldenvalley]

Nov 2, 2022 21:21:32 GMT LFC said:

The Fed just clearly stated that they're going to continue to fight inflation by squeezing the savings out of middle and lower class households. What a country we live in, where windfall profits from price gouging are protected and the savings of ordinary people are targeted.

Jon Schwarz, Mayor, Arkham MA
@schwarz

It's rare to see the Fed speaking this clearly about how it works, but here the president of the Kansas City branch says Americans have too much money and that's a problem the Fed's going to solve.

www.npr.org/2022/11/02/1133195996/fed-federal-reserve-interest-rates-hike-increase-inflation-unemployment-powell

Higher mortgage rates clearly has lowered the price and pace of residential sales in my neck of the woods.  That is not a bad thing except for the fact that there is a shortage of entry level housing in the state.  

The Feds kept the interest rate very low for a long time. Low and middle income folks benefited from that, but so did large corporations.  Is there a way to structure interest rates depending on who is doing the borrowing?  I realize the market doesn't work that way but is there a way to engineer around it?  

[indy]

Nov 2, 2022 22:19:40 GMT goldenvalley said:

Nov 2, 2022 21:21:32 GMT LFC said:

The Fed just clearly stated that they're going to continue to fight inflation by squeezing the savings out of middle and lower class households. What a country we live in, where windfall profits from price gouging are protected and the savings of ordinary people are targeted.

Higher mortgage rates clearly has lowered the price and pace of residential sales in my neck of the woods.  That is not a bad thing except for the fact that there is a shortage of entry level housing in the state.  

The Feds kept the interest rate very low for a long time. Low and middle income folks benefited from that, but so did large corporations.  Is there a way to structure interest rates depending on who is doing the borrowing?  I realize the market doesn't work that way but is there a way to engineer around it?  

As you said, things aren't really set up that way currently. The Federal Funds Rate basically dictates a few simple things, with the two most interesting ones being the rate at which bank lends to each other and the interest rate the government pays to banks for the cash reserves they are legally required to keep on hand. So really, it's not the government lending money in any real sense but rather an indirect scheme to influence the interest rate that banks set. The decisions of who those banks lend to and at what rate are completely dictated by their own policies.

In addition, the really large corporations don't borrow from banks anyway (not entirely true but close enough). They issue bonds instead and the rate at which they can borrow is influenced by many, many factors but they are borrowing directly from the public.

Note that mortgage rates, which are arguably the most important rate to consumers, operates on a completely different mechanism, and are tied almost entirely to the 10 year bond rate---for the constant rate mortgages anyway. ARM rates are dependent on even other interest rates (LIBOR or constant rate bond maturities usually).

Anyway, it's a very complex system across lots of different market operations and risk profiles, so switching to a system where the government somehow tries to directly control the lending rates depending on who is doing the borrowing would be a recipe for long-term disaster in my view. Banks, and people more generally, are simply lending to make money and they will direct their capital to the people who give them the largest profit given the perceived risk.  It's entirely possible that trying to set rates 'lower' for some group will have the effect of simply drying up loans for that group. Of course, maybe not because it will depend on who else can borrow and at what rate, so the demand will likely dictate it. In that case, maybe during business booms when borrowing is in high demand for businesses borrowing at the higher rate, loans for low and middle income folks would dry up but be OK at other times. I have no idea what would happen.

I would simply point to the student loan program. That has worked out well, hasn't it? Low and middle income folks get to borrow at 'below' market rates. Nobody, I think, doubts the original intentions, but really the long-term effect has been, first, to drive up prices for everyone, insanely so in my view, and second for people to assume debt they can't service anyway or if they can puts them under duress for the most important part of their earning lives. Actually, I kind of wonder what other indirect effects it has had, if any, in terms of family formation, delayed home buying, birth rates? Maybe they have been good changes, maybe bad. Again, I don't know. It's simply crazy.

Bottom line, I think, is that the sheer size of the various markets and the interdependence of them would make me kind of laugh at anyone who could claim to predictably engineer them, and probably make me keel over  laughing if the government claimed it could do it. The law of unintended consequences looms extremely large.

Stepping back, I'm not at all sure giving 'low and middle income folks' preferable treatment in loan borrowing is even a good idea. Surely there are better ways to help people than potentially giving them the ability to borrow, even at a somewhat better rate.

[LFC]

Why yes, the markets are insane.

Stocks mounted their biggest rally since 2020 after October’s reading of consumer prices raised hopes that inflation has peaked.

The Dow Jones Industrial Average jumped more than 1,000 points, or more than 3% for its biggest one-day gain since the market was emerging from the depths of the pandemic bear market. The S&P 500 jumped 4.6% for its biggest one-day rally since April 2020. The Nasdaq Composite surged 6%, also its biggest pop since 2020.

October’s consumer price index rose just 0.4% for the month and 7.7% from a year ago, its lowest annual increase since January and a slowdown from the 8.2% annual pace in the prior month. Economists were expecting increases of 0.6% and 7.9%, according to Dow Jones. Excluding volatile food and energy costs, so-called core CPI increased 0.3% for the month and 6.3% on an annual basis, also less than expected.

Treasury yields plunged after the CPI report, with the 10-year Treasury yield falling more than 18 basis points to 3.946% as traders bet the Federal Reserve would slow its aggressive tightening campaign that’s weighed on markets all year. The yield on the 2-year Treasury dropped more than 23 basis points to 4.395% (1 basis point equals 0.01%). The U.S. Dollar, another recent pressure point for stocks, tumbled to its worst day since 2015 vs. a basket of other currencies.

“Interest rates are still running everything in markets,” said Exencial Wealth’s Tim Courtney. “With today’s CPI number coming down, the market is now betting pretty clearly that they think the interest rate [rises] are coming close to an end. So, you see those interest rate sensitive stocks doing really, really well.”

[LFC]

This post by Barry Ritholtz was about the collapse of SVB but the chart of interest rate hikes seems to belong here. I know inflation jumped but this looks insanely aggressive. Maybe it's justified but it's certainly historic.

[goldenvalley]

Mar 14, 2023 15:28:10 GMT LFC said:

This post by Barry Ritholtz was about the collapse of SVB but the chart of interest rate hikes seems to belong here. I know inflation jumped but this looks insanely aggressive. Maybe it's justified but it's certainly historic.

Will we ever really know what causes inflation?  I mean all of it, not just demand being higher than supply.  Like how much is caused by profit taking by companies that raised prices due to inflationary pressures but never bothered to reduced them when the pressure eased or disappeared? I'm also thinking about my theory that health insurance companies raised premium rates during the roll out of Obamacare because they could claim that Obamacare caused them to raise prices. How can that be measured or estimated?

[indy]

Yeah, it's hard to tell what is cause and what is effect when it comes to these things. Everybody as a story they want to tell but the wellspring of their perspective usually remains hidden even from themselves.

I have real estate. Some of it is in larger (not urban) towns and some in smaller towns. There has been quite a disparity in how much more the cost of everything went up in the larger towns for everything from trash removal to lawn services to energy costs, while there is not nearly the same movement in the smaller towns. I have no idea why.

Personally, I think the fed sat on their heels a little too long and then overcompensated.

[LFC]

Mar 14, 2023 16:17:22 GMT goldenvalley said:

Will we ever really know what causes inflation?  I mean all of it, not just demand being higher than supply.  Like how much is caused by profit taking by companies that raised prices due to inflationary pressures but never bothered to reduced them when the pressure eased or disappeared? I'm also thinking about my theory that health insurance companies raised premium rates during the roll out of Obamacare because they could claim that Obamacare caused them to raise prices. How can that be measured or estimated?

Exactly how much was caused by corporate profiteering may never be known, but we know it's significant.

How ‘Excuseflation’ Is Keeping Prices — and Corporate Profits — High
One-off disruptions can provide cover for companies to keep prices high.
[snip]
Now, a growing body of analysts and researchers see this pattern playing out across Corporate America, with companies using unusual disruptions as an excuse to raise prices for their goods and services, thereby allowing them to expand profit margins.

And over the last few years, businesses have been able to point to a smorgasbord of “once-in-a-lifetime” emergencies stemming from the pandemic and Russia’s invasion of Ukraine, which together have effectively roiled everything from semiconductor production to commodities markets and shipping.

The key question is, in an economy where the consumer continues to spend freely, how sticky this ‘excuseflation’ proves to be and how high the Federal Reserve will have to drive up interest rates to prompt businesses to lower prices, or at least stop raising them. At 6.4%, annual inflation is down from its peak last year but still well above the Fed’s 2% target.

“A lot of companies had these one-off or very, very rare excuses to raise prices and begin to find how much the consumer would take,” Samuel Rines, a managing director at Corbu LLC, says in the latest episode of the Odd Lots podcast. “Once you get that price push, once you figure out that the consumer’s willing to pay it, that is margin expansive over time, as you begin to have a normalization in your input cost.”

He cites a plethora of companies that are taking price over volume, or the ‘POV’ strategy, as he’s dubbed it. These include all-American favorites like PepsiCo Inc. and Home Depot Inc. and even two retailers long known for their discounted prices: Walmart Inc. and Dollar Tree Inc.

And while any company would naturally like to always be able to raise prices without taking a major hit to market share, in this environment of sub-3.5% unemployment and average hourly earnings growth running over 4% annually, consumers are by and large stomaching these price hikes. They’ve typically only sparked modest hits to customer demand. That explains why the Fed is so focused on cooling off the labor market — and wage growth, in particular — to get inflation back under control.

In the meantime, a defining factor of this excuseflation — and one potential reason it’s proving difficult to stamp out — is that it gives companies a cover to raise prices together, limiting in the process customers’ ability to vote with their feet by shopping elsewhere.

Got that? We have to take money away from consumers to tame price gouging. What a country we live in, eh?

This gives you some idea how bad it is.

[goldenvalley]

Mar 14, 2023 20:42:34 GMT LFC said:

Got that? We have to take money away from consumers to tame price gouging. What a country we live in, eh?

We're all just paperclips on the corporations' spreadsheets. The economy is to run for the benefit of the corporations. Gosh I sound like a Bernie supporter!

[LFC]

The frustrating thing is that it doesn't have to be either/or. It's just what we managed to "build" here in America.

[goldenvalley]

I put this here because I assume the death of 18,000 dairy cattle will cause dairy prices to rise.  I'm sure this will somehow be Biden's fault.

At least 18,000 cattle were killed in an explosion and fire at a dairy farm in Texas on Monday, April 10.

KFDA, 13 News’ sister station in Amarillo, Texas, reported it happened at the South Fork Dairy in Dimmitt.

Castro County Sheriff Sal Rivera said the fire from the explosion spread to the building where they haul cattle before bringing them into the milking area and into a holding pen.

“There’s some that survived, there’s some that are probably injured to the point where they’ll have to be destroyed,” Rivera said.

While the Texas State Fire Marshal is investigating the explosion Rivera said he believes it was due to insulation catching fire.

I don't think of Texas when I think dairy, but...

Texas is ranked fourth nationally in milk production, according to the Texas Association of Dairymen, and Castro County is second in the state.

[pnwguy]

Apr 14, 2023 16:38:06 GMT goldenvalley said:

I put this here because I assume the death of 18,000 dairy cattle will cause dairy prices to rise.  I'm sure this will somehow be Biden's fault.

If a comet hit the earth, Republicans would scream that it was Biden's fault....

[andydp]

Apr 14, 2023 18:46:52 GMT pnwguy said:

Apr 14, 2023 16:38:06 GMT goldenvalley said:

I put this here because I assume the death of 18,000 dairy cattle will cause dairy prices to rise.  I'm sure this will somehow be Biden's fault.

If a comet hit the earth, Republicans would scream that it was Biden's fault....

They will claim Biden was trying to harvest the methane from the cow "burps" and something went wrong.

[LFC]

This is an article up at WaPo. After reading this part my first thought was, "Wait! Until SVB tank, wasn't the Fed planning on raising rates even more?" It sounds like the bank collapse may have prevented Fed overreach that could have actually harmed our economy.

But there is more good news. Inflation is dropping. By a lot. The White House in a written statement last week succinctly observed, “The annual inflation rate for producers is 2.7 percent — the lowest rate in more than two years. On average, prices set by businesses actually fell last month.”

This comes on the heels of news that consumer prices are heading in the right direction. Consumer prices fell to an annual increase of 5 percent in March on a year-to-year basis, down from February’s 6 percent year-to-year. That’s the lowest since May 2021.

Core inflation, which includes volatile fuel and food prices, increased 0.4 percent from February, down from a 0.5 percent increase in the preceding month. However, the Times notes: “The overall energy index was 3.5 percent lower than in February on a seasonally adjusted basis, and down 6.4 percent from a year earlier. Gasoline prices are down 17.4 percent from a year earlier, when the shock of Russia’s invasion of Ukraine sent oil prices rocketing upward.”

To give some context, White House Council of Economic Advisers member Heather Boushey on Wednesday told Yahoo News, “This is the ninth month of consistent slowdown in the pace of inflation, so that 5% rate is a slowdown from months before.”

[goldenvalley]

So P & G raised their prices and what do you know?  Quarterly revenue went up even though they sold less. And we wonder why inflation is "stubborn."

Procter & Gamble, a consumer goods bellwether, said that its profit grew in the first three months of the year after it raised prices 10 percent across its brands, the second consecutive quarterly double-digit increase. The company’s profit margin expanded in the quarter, with price increases more than offsetting the rise in what it paid for raw materials.

Revenue rose 4 percent last quarter versus the year before, even as sales volumes — the number of rolls of Charmin toilet paper and boxes of Tide detergent — fell by 3 percent, as consumers traded down to less expensive alternatives or bought less. In other words, Procter & Gamble made more money even though it sold fewer products. Sales volumes at the company have declined for the past four quarters.

[LFC]

The Fed is on the verge of potentially f***ing up, bigly.

Since the Federal Reserve first kicked off its inflation-fighting campaign 15 months ago, it has raised interest rates nine consecutive times and wound down its pandemic-era bond-buying program, notching the fastest pace of monetary policy tightening in four decades. So far, it has achieved a balance that its critics thought nearly impossible, cutting headline price growth nearly in half while keeping the U.S. economy humming.
Since the Federal Reserve first kicked off its inflation-fighting campaign 15 months ago, it has raised interest rates nine consecutive times and wound down its pandemic-era bond-buying program, notching the fastest pace of monetary policy tightening in four decades. So far, it has achieved a balance that its critics thought nearly impossible, cutting headline price growth nearly in half while keeping the U.S. economy humming.

The problem is that the job is far from over, and the most difficult days lie ahead. As the central bank’s policy committee gears up for its May 2-3 meeting and what is widely expected to be a 10th rate hike, it will be embarking on a new and more volatile phase in its tightening cycle, marked by far less clarity than what has come before. The risk of a misstep is growing, and the consequences of over- or undershooting would be severe.

A reminder that this has been the most aggressive set of rate hikes in decades. Some blame for the SVB, Signature, and First Republican failures has been placed on them not being able to adjust to rising rates.

[LFC]

Ritholtz says it's time for the Fed to pause on their rate hikes.

Today we find out if the belated, rapid rise from zero to 5%, breakage be damned, was sufficient.

My view is that it is; if anything, raising rates faster further increases rental costs and therefore drives owners’ equivalent rate (OER) up, making CPI even higher. While the word “Transitory” has gotten a bad rap, many of the pandemic-related pricing issues, including supply chains, lumber, shipping container costs, and semiconductor availability have improved, driving prices lower, and often back to pre-pandemic levels.

Here's where he says we stand. There are links in here available in the article.

“The long and variable lag of monetary policy” is a complex phrase that suggests ambiguity about when, where, and how higher rates manifest in a large and interconnected economy like that of the United States.

The truth is we simply don’t know.

What we do know is the fastest set of rate hikes in modern times have been breaking things, and if it continues, it’s likely to get worse. The good news is that goods prices have been coming down, and services, while still elevated, are beginning to trend in the right direction. Which is why the FOMC would be better off doing nothing, waiting to see what the next few months of data show.

We never want the cure to be worse than the disease…

He points out that the economy is slowing.

I have been putting together my Q2 quarterly client call, and impatiently waiting for two last data points to show: State Coincident Indicators and Q1 GDP. Together they paint a fascinating picture of an economy robust enough to withstand the fastest set of rate increases in history, but also one that is showing signs of slowing. (Crosscurrents of these types are not uncommon in a world that is rife with shades of grey…)

GDP for the first quarter of 2023 was 1.1% – lower than Wall Street’s 2.0% consensus — but also included a consumption gain of 4%. Core PCE was an elevated (but improved) 4.9%. Consumers are still spending, but in many areas, it is a case of price over volume due to the impact of elevated (but slowing) price increases.

Hold these two thoughts in your mind at the same time: We have a robust and resilient economy, but it is not Superman: It is slowing in response to higher rates, elevated service prices, high real estate costs, and tightening credit levels.

Of the 50 states in the Philadelphia Fed’s State Coincident Indexes for March 2023, only one — Alaska — is negative. “Over the past three months, the indexes increased in 49 states and decreased in one, for a three-month diffusion index of 96.” The one-month diffusion index was 98.

This suggests a slowing, but not necessarily a recession. Last June, we looked at the prior six recessions going back to 1979. We currently see none of the pre-recession warnings that are typical before economic contractions. In the past, the State Coincident Index has been a fairly reliable “early warning” of increasing probabilities of recessions. Typically, we see state-by-state slowings several quarters (or sometimes years) prior. Instead of most states showing expansion, before recessions, that will drop to 45, 40, then 35 before a recession begins; eventually, the number of expanding states then fall to 10, 5, or 0.

The takeaway from this is that there is no recession imminent, and none on the horizon for the next few months. This obviously could change rapidly, most notably if the Fed overtightens or if credit conditions and availability get appreciably worse.

He supplied other indicators backing his view.

[LFC]

Ritholtz's latest take on inflation which continues to ease. It's interesting to see that the cost of services is now the single biggest factor.

His summation:

The old regime of a 2% inflation target is dead. I would move the goalposts towards a more rational 3% over the next 12 months. To get back to 2% inflation target, the economy would need some combination of ZIRP, or higher unemployment, or more than a mild recession.

The Fed’s new motto should be 3% or bust…

[goldenvalley]

We are so screwed...and the Fed has limited tools to deal with it...and our free market capitalistic underpinnings makes actual price control via legislation impossible.  (Link is to the full article)

The prices of oil, transportation, food ingredients and other raw materials have fallen in recent months as the shocks stemming from the pandemic and the war in Ukraine have faded. Yet many big businesses have continued raising prices at a rapid clip.

Some of the world’s biggest companies have said they do not plan to change course and will continue increasing prices or keep them at elevated levels for the foreseeable future.

That strategy has cushioned corporate profits. And it could keep inflation robust, contributing to the very pressures used to justify surging prices.

As a result, some economists warn, policymakers at the Federal Reserve may feel compelled to keep raising interest rates, or at least not lower them, increasing the likelihood and severity of an economic downturn.
“Companies are not just maintaining margins, not just passing on cost increases, they have used it as a cover to expand margins,” Albert Edwards, a global strategist at Société Générale, said, referring to profit margins, a measure of how much businesses earn from every dollar of sales.

The Producer Price Index, which measures the prices businesses pay for goods and services before they are sold to consumers, reached a high of 11.7 percent last spring. That rate has plunged to 2.3 percent for the 12 months through April.

The Consumer Price Index, which tracks the prices of household expenditures on everything from eggs to rent, has also been falling, but at a much slower rate. In April, it dropped to 4.93 percent, from a high of 9.06 percent in June 2022. The price of carbonated drinks rose nearly 12 percent in April, over the previous 12 months.

And then there is the blame the consumer attitude of some:

But analysts who distrust that explanation said there were other reasons consumer prices remained high. Since inflation spiked in the spring of 2021, some economists have made the case that as households emerged from the pandemic, demand for goods and services — whether garage doors or cruise trips — was left unsated because of lockdowns and constrained supply chains, driving prices higher.

David Beckworth, a senior research fellow at the right-leaning Mercatus Center at George Mason University and a former economist for the Treasury Department, said he was skeptical that the rapid pace of price increases was “profit-led.”

Corporations had some degree of cover for raising prices as consumers were peppered with news about imbalances in the economy. Yet Mr. Beckworth and others contend that those higher prices wouldn’t have been possible if people weren’t willing or able to spend more. In this analysis, stimulus payments from the government, investment gains, pay raises and the refinancing of mortgages at very low interest rates play a larger role in higher prices than corporate profit seeking.

“It seems to me that many telling the profit story forget that households have to actually spend money for the story to hold,” Mr. Beckworth said. “And once you look at the huge surge in spending, it becomes inescapable to me where the causality lies.”
Mr. Edwards acknowledged that government stimulus measures during the pandemic had an effect. In his eyes, this aid meant that average consumers weren’t “beaten up enough” financially to resist higher prices that might otherwise make them flinch. And, he added, this dynamic has also put the weight of inflation on poorer households “while richer ones won’t feel it as much.”

These damn people are spending money so we have no choice but to raise the price of food.  Logical, right?

I wonder if consolidation and the Walmartization of supply chains has something to do with this too.  Walmart puts the screws on suppliers of all kinds who then charge more for the same product sold to small chains or independent stores.  That's gotta have an impact too.

[pnwguy]

May 30, 2023 18:48:34 GMT goldenvalley said:

I wonder if consolidation and the Walmartization of supply chains has something to do with this too.  Walmart puts the screws on suppliers of all kinds who then charge more for the same product sold to small chains or independent stores.  That's gotta have an impact too.

That was the point of the other NYTimes article on food inflation.

www.nytimes.com/2023/05/29/opinion/inflation-groceries-pricing-walmart.html

A level playing field was long a tenet of U.S. antitrust policy. In the 19th century, Congress barred railroads from favoring some shippers over others. It applied this principle to retailing in 1936 with the Robinson-Patman Act, which mandates that suppliers offer the same terms to all retailers. The act allows large retailers to claim discounts based on actual volume efficiencies but blocks them from extracting deals that aren’t also made available to their competitors. For roughly four decades, the Federal Trade Commission vigorously enforced the act. From 1954 to 1965, the agency issued 81 cease-and-desist orders to stop suppliers of milk, tea, oatmeal, candy and other foods from giving preferential prices to the largest grocery chains.

As a result, the grocery retailing sector was enviable by today’s standards. Independent grocery stores flourished, accounting for more than half of food sales in 1958. Supermarket chains like Safeway and Kroger also thrived. This dynamism fed a broad prosperity. Even the smallest towns and poorest neighborhoods could generally count on having a grocery store. And the industry’s diffuse structure ensured that its fruits were widely distributed. Of the nearly nine million people working in retailing overall in the mid-1950s, nearly two million owned or co-owned the store where they worked. There were more Black-owned grocery stores in 1969 than there are today.

Then, amid the economic chaos and inflation of the late 1970s, the law fell into disfavor with regulators, who had come to believe that allowing large retailers to flex more muscle over suppliers would lower consumer prices. For the most part, the law hasn’t been enforced since. As a top Reagan administration official explained in 1981, antitrust was no longer “concerned with fairness to smaller competitors.”

This was a serious miscalculation. Walmart, which seized the opening and soon became notorious for strong-arming suppliers and undercutting local businesses, now captures one in four dollars Americans spend on groceries. Its rise spurred a cascade of supermarket mergers, as other chains sought to match its leverage over suppliers. If the latest of these mergers — Kroger’s bid to buy Albertsons — goes through, just five retailers will control about 55 percent of grocery sales. Food processors in turn sought to counterbalance the retailers by merging. Supermarket aisles may seem to brim with variety, but most of the brands you see are made by just a few conglomerates.

These food giants are now the dominant buyers of crops and livestock. The lack of competition has contributed to the decline in farmers’ share of the consumer grocery dollar, which has fallen by more than half since the 1980s. In the absence of rivals, food conglomerates have over time increasingly been able to raise prices and as a result have reported soaring profits over the past two years. Inflation gives them a cover story, but it’s the lack of competition that allows them to get away with it. Meat prices surged last year among the four companies that control most pork, beef and poultry processing. Companies like PepsiCo and General Mills have also jacked up prices without seeing any loss of sales — a sure sign of uncontested market power.

[goldenvalley]

May 30, 2023 22:10:32 GMT pnwguy said:

May 30, 2023 18:48:34 GMT goldenvalley said:

I wonder if consolidation and the Walmartization of supply chains has something to do with this too.  Walmart puts the screws on suppliers of all kinds who then charge more for the same product sold to small chains or independent stores.  That's gotta have an impact too.

That was the point of the other NYTimes article on food inflation.

www.nytimes.com/2023/05/29/opinion/inflation-groceries-pricing-walmart.html

I didn't know about that article, very interesting.  I was going on stuff I learned from a pharmacist who was decrying the Walmartization of retail pharmaceuticals.  Independent pharmacies or even small local chains are gone for the most part.  And in the small Midwestern town of my childhood, Walmart came in and crushed all local clothing, hardware, and pharmacies and then closed the Walmart itself, leaving the town without any pharmacy.  

[pnwguy]

May 30, 2023 22:21:37 GMT goldenvalley said:

I didn't know about that article, very interesting.  I was going on stuff I learned from a pharmacist who was decrying the Walmartization of retail pharmaceuticals.  Independent pharmacies or even small local chains are gone for the most part.  And in the small Midwestern town of my childhood, Walmart came in and crushed all local clothing, hardware, and pharmacies and then closed the Walmart itself, leaving the town without any pharmacy.  

That's just the creative destruction of Free Markets, don't you know?  Your town was just inefficient and had to suffer the consequences of it.

When I was in college, the ascendancy of Milton Freedman and his brand of libertarian economics was taking root.  But especially in the 80s, the essentially crippling of anti-trust regulation was beginning.  And as the Democratic Party realized they too could get in on corporate campaign money grifting, they were happy to be enablers. Who was the biggest power in Bill Clinton's Arkansas?