June 23, 2022 at 3:51 AM - Views: 50 #492582
June 23, 2022 at 5:13 AM #492589Cold Mountain TrailParticipant
- Total Posts: 13,196
The price of just about everything in the U.S. economy can be broken down into the three main components of cost. These include labor costs, nonlabor inputs, and the “mark-up” of profits over the first two components. Good data on these separate cost components exist for the nonfinancial corporate (NFC) sector—those companies that produce goods and services—of the economy, which makes up roughly 75% of the entire private sector.
Since the trough of the COVID-19 recession in the second quarter of 2020, overall prices in the NFC sector have risen at an annualized rate of 6.1%—a pronounced acceleration over the 1.8% price growth that characterized the pre-pandemic business cycle of 2007–2019. Strikingly, over half of this increase (53.9%) can be attributed to fatter profit margins, with labor costs contributing less than 8% of this increase.
This is not normal. From 1979 to 2019, profits only contributed about 11% to price growth and labor costs over 60%, as shown in Figure A below. Nonlabor inputs—a decent indicator for supply-chain snarls—are also driving up prices more than usual in the current economic recovery…
Currently… the labor share of income and real wages are falling sharply in the recovery even as unemployment falls. It seems strange to see a pattern in the data that is the complete opposite of how overheating-driven inflation has historically worked and not ask if it might be something different this time causing inflation (i.e., the pandemic)…
Deserves a good read: this is not your father’s recession. Its a new beast.
June 23, 2022 at 11:01 AM #492604djean111Participant
- Total Posts: 8,337
Unless that tax can be channeled in to the MIC or “pandemic preparedness”.
I wish that statement was over the top cynicism, I really do. The most that will happen is sternly worded letters and campaign pandering rhetoric about inflation. Really good article, thanks!
America is not a country, it's just a business. (Brad Pitt, Killing Them Softly)
"Sometimes when I try to understand a person's motives, I play a little game. I assume the worst. What's the worst reason they could possibly have for saying what they say and doing what they do? Then I ask myself, 'How well does that reason explain what they say and what they do?'" GRRM
A YouTube comment – we need new conspiracy theories – the old ones have all come true.
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