There’s no denying the fact that the price of just about everything has soared in the last few years, as the COVID-19 pandemic began to wane.
Many CEOs of corporations say prices for the goods their companies sell went up because the cost of the supplies they need to make the goods – as well as costs related to other production and shipping aspects – went up as well.
Yet, it’s hard to ignore the fact that these corporations are still making money hand over fist. Plus, the CEOs in question had an average salary of $14.8 million in 2022 compared to $58,800 for the typical American worker.
This has led many to question whether companies are simply using inflation as a way to justify how they’re jacking up prices for American consumers.
The non-profit group Accountable.US recently sent out a release about this topic, in which its director of economic security and corporate power, Liz Zelnick, said:
“Higher interest rates haven’t stopped S&P companies, especially in the big food industry, from inflating consumer prices despite reporting billions in extra net earnings and over a trillion dollars in giveaways to wealthy investors.”
The watchdog group said it found “many of the largest general consumer S&P 500 companies have admitted to benefitting from increased prices as their net profits increased year-over-year and they rewarded shareholders with billions in new shareholder handouts.”
The group laid out some specific examples of how this has played out.
Tyson Foods, for instance, experienced an increase in its net income from $3 billion in fiscal year 2021 all the way up to more than $3.2 billion in fiscal year 2022.
They used all that extra net income to divvy out $1.35 billion to shareholders, which was $652 million more than it did the year before.
PepsiCo is another example of corporate greed at work. The company’s net income increased 16.9% last year, reaching nearly $9 billion. In addition, PepsiCo issued in excess of $7.5 billion in dividends and stock buybacks last year.
Even General Mills experienced a huge uptick in income, increasing by 16.5% from 2021 to 2022, reaching a total of $2.7 billion.
Some people have long dismissed what’s referred to as “greedflation” as just a conspiracy theory, but it looks as if it’s playing out in real-time right now. Plus, there seems to be no real end in sight to all of this.
A recent report from The New York Time read:
“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.”
Paul Donovan, who serves as the chief economist for UBS Global Wealth Management, said recently that what we’re experiencing is “profit-led inflation,” and it’s had three waves.
The pandemic caused the first wave, and Russia invading Ukraine caused the second one.
Donovan said that both of those waves were just “excuses” that corporations used as “cover” to increase prices.
Now, the third stage that we’re in is caused by one thing only, Donovan said – corporate greed.
