Inflation or margin improvement?

[fdcg27]

I'd throw in the mix that we've had enough corporate mergers over the last decade that we're really getting into oligopolistic behavior. They raise their rates then ask, who else are you going to buy from?

I'm doing my absolute best to lay low and buy as little as possible. I don't like rewarding bad behavior.

You make a very good point.
Thinking of certain industries, consolidation has led to concentration and reduced or eliminated competition.
Tacit collusion is much more likely when there are fewer players in any given market.
Constraining supply leads to higher market prices on goods that have a significant level of price in-elasticity because they are needed and not readily replaced with substitute goods, fuel being a good example. While we might reduce our egg consumption, we do need to heat our homes in winter and drive ourselves to work.

 

[dlundblad]

It's greed, evidenced by the soaring profits.

If it really was just inflation, they would be hurting, and less profitable.

What makes you think profits are abnormally high as opposed to simply appearing high because of inflation?

 

[slacktide_bitog]

What makes you think profits are abnormally high as opposed to simply appearing high because of inflation?

High inflation actually hurts profits due to higher costs that can't always be passed on due to competition.

 

[dlundblad]

High inflation actually hurts profits due to higher costs that can't always be passed on due to competition.

Within reason, people still need stuff, food etc. Since prices have risen, we haven't changed our spending habits. We are just paying more at the end.

My next question is which companies are showing record profits?

 

[PandaBear]

Most would agree that any competitive market would requires at least 3-5 producers. Any less than that would results in anti-competitive behaviors.

Last several years we have many dairy farmers producing below cost and went out of business, so in a way I would say it is unrealistic to assume those prices back then would stay for long. I think the current prices for dairy products make more sense than before.

Regarding to eggs, I think not everyone is selling for $5-6 / dozen. I know in my area Safeway is a relative ripoff and Trader Joe's, Costco, Sprouts have more reasonable prices despite being 50% more than before. I'm still eating lots of eggs because it is cheaper than meat; I can't afford to eat beef very often and now get most of my animal proteins from eggs and chicken.

 

[Pew]

I'd throw in the mix that we've had enough corporate mergers over the last decade that we're really getting into oligopolistic behavior. They raise their rates then ask, who else are you going to buy from?

I'm doing my absolute best to lay low and buy as little as possible. I don't like rewarding bad behavior.

I'd like to add on, the amount of certifications, insurance, legal fees, etc that companies need is so dam high that I wonder how some SMBs survive at all. I just went through a cyber security insurance assessment for work and some of the questions they ask makes me wonder how many SMBs survive. Things are so litigious now, I'd hate to be an SMB owner.

Then you get these massive corporations that they're the only ones who came eat these restrictions and fees, underpin everybody else, buy them up, then you're left with a duopoly with the small guys picking up scraps.

 

[TiGeo]

"Greed is good." - G. Gecko

 

[ATex7239]

Some of it is greed and some of it is out of necessity. Companies which have longer lead time items must increase profit margins to keep the revenue high enough to sustain the business. Something that may have taken 4-6 weeks to ship out and invoice pre-pandemic now can take 4-6 months. The higher margin is needed to make it through substantially increased time to revenue. Think about it like getting paid every 2 weeks vs once a quarter. The latter necessarily has to be bigger for you to make it to the next pay check.

 

[alarmguy]

Nothing wrong with companies making the highest possible profit on their products, that is why they are in business.
Look at Tesla as a recent example. People proudly point out they have the highest margin in the industry, I don't hear anyone calling them greedy or is it greedy if it negatively affects you directly?

Just things to think about, Americans lives are filled with excesses, no one is forced to buy anything and please don't tell me Americans are starving for food. If people showed restraint prices would stabilize and come down, that will never happen, we are not a thrifty nation by any means. We want it and we want it/buy it now. No one is forced into buying anything, our lives filled with worthless junk, including what we eat, the most established fast food industry in the world (if you want to call it food) 2021 along we spent 300 BILLION dollars eating that garbage, our bellies show it and our medical bills show it.

the most popular model car in the world, lists for over $40,000 laughable when "starving Americans can spend half that for a compact car. The list is endless, right down to $500+ cell phones

 

[JeffKeryk]

Nothing wrong with companies making the highest possible profit on their products, that is why they are in business.
Look at Tesla as a recent example. People proudly point out they have the highest margin in the industry, I don't hear anyone calling them greedy or is it greedy if it negatively affects you directly?

Just things to think about, Americans lives are filled with excesses, no one is forced to buy anything and please don't tell me Americans are starving for food. If people showed restraint prices would stabilize and come down, that will never happen, we are not a thrifty nation by any means. We want it and we want it/buy it now. No one is forced into buying anything, our lives filled with worthless junk, including what we eat, the most established fast food industry in the world (if you want to call it food) 2021 along we spent 300 BILLION dollars eating that garbage, our bellies show it and our medical bills show it.

the most popular model car in the world, lists for over $40,000 laughable when "starving Americans can spend half that for a compact car. The list is endless, right down to $500+ cell phones

Yes, we generally have choices and it is on us as consumers if we choose the expensive item. But some products are produced by ologopolies, and they collude. And with this power, they have little reason to improve their product. What's a poor boy to do?

That's the beauty of Capitalism; someone with an idea and the energy to develop it just might be able to take market share from the big guys and maybe even change the world. And get rich in the meantime... That's what Adam Smith wrote, anyways.

Smith implied that technological innovations come about because humans are stimulated by the incentive of economically benefiting from the improvements they introduce.

 

[SeaJay]

Corporations are created to maximize profits for the owners. They charge as much as the market will bear. What keeps them in check is the law of supply and demand, federal anti collusion laws along with competitor corporations that will sell cheaper if it makes financial sense to do so.

 

[Number_35]

Until we realize that envy is a hollow motivation

Are we perhaps envious of the wrong things? Instead of being envious of Mr Smith's fancy new car and big house, perhaps we should be envious of Mr Jones's loving relationship with his wife and children, or Mr Johnson's handyman skills, or Mr Murray's generosity of spirit, or Mr Jacobson's integrity, etc.

What is important is who we are, not what we have.

(Perhaps I'm rationalizing, as I sit here in my rusty '07 Dodge van.)

 

[CanAmAndMore]

I've owned a trucking company for 34 years.
These last 10 years have been good, especially the last 3 years. Tires, parts, fuel, insurance, wages, truck prices, are all way up...but so are rates.
The 1990s were good to me.
2007 to 2011 were terrible.
Having sold off many trucks and trailers recently, I am down to a measly 8 trucks, and 14 trailers...yet the money is rolling in just fine.
I'm not rich by any means.
But am comfortable, and most importantly for me, debt free.
Three O/Os are pulling for me, power only, pulling my trailers, under my contract. I don't gouge the Owners who pull for me, just make a modest profit off them. I have another trailer of mine rented out to a guy, he pays me every month to use it, has been the last 13 months.
Times are good for many companies.
But depending on what type of business someone owns, it could also be horrible times.
Glad I don't own restaurants, or hotels, these last few years.

 

[Zee09]

Inflation is a tool to temper one's thoughts
Prior to the epidemic @AutoMechanic only filled up with premium gas in all of his 87 octane vehicles and used only rare hard to find Dino oil....

Look how far he has come.... inflation educates too....

 

[zzyzzx]

And yet, I can purchase my groceries for HALF the cost of Publix, at WalMart or Costco.

I don't have Publix where I live, but even I know that Publix is overpriced (like a Wegmans?) and is only good for it's sandwiches.
No Aldi in your area?

 

[TiGeo]

I don't have Publix where I live, but even I know that Publix is overpriced (like a Wegmans?) and is only good for it's sandwiches.
No Aldi in your area?

Publix is nice b/c...they actually have people checking you out and generally is a friendly place to shop...and of course you pay for that. If you want to save money, deal with folks in pj pants that smell like dope and self check out for a big grocery run, Walmart.

 

[Reloader59]

Corruption at many levels, greed.