It's the Greed and Hubris, Stupid
Inflation in America is coming down but it is corporate profit taking that is raising prices now.
2021 2022 2025 2024
7% 6.5% 3.5% 3%
Current US Inflation Rates: 2000-2024 (usinflationcalculator.com)
The type of Inflation we were experiencing in 2021 and 2022 was Demand-Pull Inflation. Demand-Pull Inflation happens when consumers have more money to spend out increasing demand in the economy (pandemic and child tax credit checks). The CEOs see this increase and slow down the supply lines they control, the ships off the coasts waiting to be unloaded. This lessens the amount of goods available for sale in retail outlets. Higher demand and lower stock = higher prices, they blame on “inflation” to try to hide their greed and hubris. They could only slow down shipping for so long, the rising prices are now revealing their greed. See my chart below for corporate profits during the same period
What Is Demand-Pull Inflation?
Demand-pull inflation occurs when demand for goods and services exceeds supply in the economy. While demand increases, the supply of goods and services available for purchase may remain the same or drop. Demand-pull inflation causes upward pressure on prices due to shortages in supply, a condition that economists describe as too many dollars chasing too few goods. An increase in aggregate demand can also lead to this type of inflation.
KEY TAKEAWAYS
Demand-pull inflation happens when demand for goods and services outweighs supply, which remains stable or drops.
Demand-pull inflation results in higher prices.
A low unemployment rate is unquestionably good in general, but it can cause inflation because more people have more disposable income.
Although increased government spending is good for the economy, it may lead to a scarcity of certain goods followed by inflation.
Demand-pull inflation can be compared with cost-push inflation, whereby production costs increase and higher prices are passed on to consumers.
What Is Demand-Pull Inflation?
(investopedia.com)