SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
greedflation
During Antitrust Trial, Exec Admits Kroger Jacked Up Milk and Egg Prices Above Inflation
"The thing is, execs all over the economy were saying this stuff on their earning calls back in 2021," said one progressive economist. "This was not a secret."
Aug 28, 2024
A top Kroger executive admitted under questioning from a Federal Trade Commission attorney on Tuesday that the grocery chain raised its egg and milk prices above the rate of inflation, a concession that came as no surprise to economists who have been highlighting corporate price gouging across the U.S. economy in recent years.
Andy Groff, Kroger's senior director for pricing, said during a court hearing on the FTC's legal challenge to the company's proposed acquisition of Albertsons—its primary competitor—that Kroger's objective is to "pass through our inflation to consumers."
Groff's comment came in response to questioning about an internal email he sent to other Kroger executives in March. In that note, Groff observed that "on milk and eggs, retail inflation has been significantly higher than cost inflation."
A Kroger spokesperson told Bloomberg in a statement that the email was "cherry-picked" and "does not reflect Kroger's decadeslong business model to lower prices for customers by reducing its margins."
But Rakeen Mabud, chief economist at the Groundwork Collaborative, noted Wednesday that "execs all over the economy were saying this stuff on their earning calls back in 2021."
"This was not a secret," Mabud added.
Bloombergreported Tuesday that "in Illinois, where Kroger operates the Mariano's chain, company executives create a weekly report on egg prices, comparing prices from Walmart, Meijer Inc., and Albertsons' Jewel-Osco, said Matthew Marx, president of the Kroger division overseeing Mariano's."
"The FTC walked Marx through several of the weekly egg reports from 2022 and 2023," the outlet added. "In May 2022, for example, both Walmart and Meijer dropped egg prices by 14 cents a dozen, but Mariano's opted to keep its pricing the same to match the higher price at Jewel-Osco, Marx said. A year later, in April 2023, as egg prices again soared, Mariano's opted to keep its pricing near Jewel-Osco's even as Walmart was lowering its own."
The U.S. grocery sector—dominated by Kroger, Walmart, and a handful of other major companies—profited hugely during the Covid-19 pandemic as corporate giants exploited supply chain disruptions to aggressively jack up prices.
"The grocery industry, as represented by four of its largest players, became more profitable in the pandemic, and it has stayed that way for a couple of years at least," The Financial Timesnoted Monday. "It is a good guess that price increases in excess of cost increases have played a role in this."
In its legal challenge against Kroger's proposed merger with Albertsons, the FTC argues that the deal would further drive up costs for consumers by eliminating "fierce competition" between the two grocers.
Laurel Kilgour, research manager at the American Economic Liberties Project, said after opening arguments in the case earlier this week that the FTC "previewed concrete evidence that a Kroger-Albertsons merger would lead to higher prices for millions of Americans and worse working conditions for hundreds of thousands of workers."
"By contrast, lawyers for Kroger and Albertsons touted fake promises of utopian outcomes that are not legally enforceable. Indeed, Albertsons has a track record of profiting from similar fake promises that turned out disastrously for competition and for communities, and this time is no different," Kilgour continued. "At a time when working families are especially concerned with costs and access to food, we need more—not less—competition between grocery stores on prices, wages, the freshness of produce, and service quality."
Keep ReadingShow Less
Biden Should Be Clear: Corporations Are to Blame for High Prices
Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.
Jun 15, 2024
I’ve analyzed every poll and survey over the last two months, and they all tell the same basic story:
Voters’ top issue is high prices and the cost of living—not jobs, not abortion, not immigration, not U.S. President Joe Biden’s or former President Donald Trump’s age, not even the survival of democracy.
Voters still don’t believe Biden will get prices down, but they believe Trump will. A significant number appear willing to vote for Trump and risk the future of democracy because they believe he will do better job lowering prices.
Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.
Which is why Biden’s approval rating on the economy is deeply underwater while perceptions of Trump’s handling of the economy when he was president (marked by low inflation but huge job losses from Covid-19) are positive.
What should Biden do?
Put blame for high prices squarely where it belongs: on big corporations with monopoly power to keep prices high.
And take those corporations on: Condemn them for price gouging. Threaten them with antitrust lawsuits, price-gouging lawsuits, even price controls. Criticize them for making huge profits and giving their top executives record pay while shafting consumers.
And name names: PepsiCo, Tyson's, Kroger and Albertsons, Exxon-Mobil, and others.
To be sure, the Biden administration has brought down the prices of prescription drugs like insulin and inhalers, reduced bank overdraft and credit card fees, and cracked down on “junk fees” levied by airlines, concert promoters, and more.
Its Department of Justice has launched a lawsuit to combat price-fixing in the meat industry. And the FTC is suing to block the Kroger/Albertsons grocery mega-merger that would send grocery bills even higher.
“We’re taking on corporate greed to bring down the price of gas, food, and rent, eliminating junk fees,” Biden told a crowd of 1,000 supporters in Philadelphia recently.
But Biden has not berated hugely profitable corporations for keeping their prices and profit margins sky high—unlike Sens. Bob Casey (D-Penn.) and Sherrod Brown (D-Ohio), who have made corporate price hikes central to their campaigns and are outrunning Biden in polls. Biden has not condemned specific corporations publicly, or threatened them with specific actions unless they lower their prices.
Brown, who represents a state that Trump won handily in 2020, has cut several web ads proclaiming he is “cracking down on the companies that rip off Ohio.”
Casey released a campaign ad showing corporate executives in suits sneaking into a grocery store under cover of night and switching out cereal boxes for smaller replacements. He has introduced a bill that would crack down on “shrinkflation”—a term for companies’ reducing the size of their goods but not cutting prices (Biden praised that legislation during his State of the Union address).
Senate Democrats in tight races, like Tammy Baldwin of Wisconsin and Jacky Rosen of Nevada, are making similar pitches.
Why isn’t Biden?
Partly, I think, because he’s uncomfortable attacking corporations directly.
It’s also because some economists close to his White House (such as Larry Summers) disagree that a major driver of inflation is corporations’ raising prices to juice profits. (Three years ago, Larry and I publicly debated a wealth tax on hugely profitable corporations. I was in favor; he against.)
But the fact is, corporate profits have surged to record levels. Shares are trading at record levels. Corporations are buying back their stock at record levels. CEO pay is at record levels. Corporate concentration—monopoly power—is higher than ever.
Concentration has increased in over 75% of U.S. industries since the late 1990s.
Consumers are getting shafted, as corporations tell Wall Street they expect to be able to keep their prices and profits in the stratosphere.
Is It Inflation? Or Is It Greedflation? | Robert Reichwww.youtube.com
Most voters agree that big corporations are largely responsible for inflation. Nearly 6 in 10 say corporations’ being “greedy” is a major cause of inflation, including a majority of independent voters, according to a poll by Navigator Research.
The Biden campaign’s internal polling has found similar results.
With less than five months to go—and the cost of living being the No. 1 issue on voters’ minds—Biden should let ‘er rip.
Keep ReadingShow Less
How Trump’s Tax Cuts Fueled Greedflation
Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
May 16, 2024
Next year, when key provisions of President Trump’s 2017 tax breaks to the wealthy and corporations expire, we have an opportunity to get our money back.
I’m not just talking about all the foregone tax revenue we’ve lost because the rich have paid so little since 2017—though we should get that back, too. I’m talking about the money families have lost to corporate price gouging.
Let me explain.
In 2017, Republicans slashed the corporate tax rate from 35% to 21%, giving massive corporations their biggest tax windfall since Ronald Reagan was president. A few years later, as Americans emerged from a global pandemic, these same corporations drove up prices for families.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families.
While inflation hamstrung workers and families, it didn’t make a dent in corporate profits. In fact, as many CEOs boasted themselves, it’s been a boon. Companies simply passed rising costs along to consumers—and then some, bringing in record profits as a result.
All told, corporate profit margins skyrocketed to 70 year-highs. And by the end of 2023, when Americans were beyond fed up, after-tax corporate profits hit an all-time record high of $2.8 trillion. My organization, Groundwork Collaborative, recently found that corporate profits drove over 50% of inflation in the second and third quarters of last year.
But why would a change in the corporate tax rate unleash the kind of rampant corporate profiteering we saw in the aftermath of the pandemic? Simple: It’s a lot more fun to gouge customers when you get to keep more of what you pull in.
Look at Procter & Gamble, which has raised the price of everything from toothpaste to diapers. Last year, the company pulled in more than $39 billion in profit.
If they had to pay the 35% statutory tax rate, they would have sent nearly $14 billion to Uncle Sam. Instead, they paid a 21% rate and, using loopholes, got to keep an extra $10 billion—which helped with their combined $16.4 billion worth of dividends and stock buybacks for shareholders.
Corporations did well from Trump’s corporate tax cuts, with executives getting big raises and shareholders receiving big buybacks. But the real bonus came when inflation hit. Corporations used the cover of supply chain issues and broader inflation to hike prices more than their higher input costs justified—and they didn’t have to worry about their tax bill.
Our tax code is exacerbating some of the worst corporate excesses, effectively “subsidizing corporate price gouging,” as Sen. Elizabeth Warren (D-Mass.) described it recently. But it’s not only that low tax rates incentivize companies to overcharge. Rock-bottom tax rates also make collusion more profitable, as we saw with Pioneer Oil.
Recently, the Federal Trade Commission barred former Pioneer Oil CEO Scott Sheffield from joining the board of ExxonMobil following their merger, because Sheffield allegedly colluded with OPEC to raise oil prices. As families struggled with higher energy costs, the oil and gas industry banded together to keep prices high, which according to one analyst accounted for 27% of inflation in 2021.
When the reward is higher with lower corporate taxes, executives like Sheffield are more willing to take the risk. Higher corporate taxes are both crucial for accountability and for ensuring that there’s far less incentive for executives to squeeze as much as they can from their customers.
Wall Street tycoons and CEOs didn’t take the heat of inflation—they fanned its flames and families got burned. It’s no wonder people overwhelmingly favor a tax code that’s no longer rigged for corporations, especially as they struggle with high prices.
Congress raising the corporate tax rate in 2025 is an opportunity to recoup some of the truly obscene profits corporate America raked in during this period of economic upheaval for American families. It’s time Americans got their money back.
Keep ReadingShow Less
Most Popular