Inflation

[Derec]

Qasim Rashid seems to be a professional activist. And he has no idea what he is talking about. There is definitely a high inflation and there is definitely a labor shortage.
As far as increasing profits in 2021, what were the profits in 2020? It's easy to have big increases from a bad baseline.
As to inflation, the price of coffee beans increased substantially.
Coffee prices hit a 10-year high, rising more than any other commodity this year
That is inflation. But Starbucks et al are evil, I guess, for being profitable businesses.

 

[ZiprHead]

As far as increasing profits in 2021, what were the profits inflation rates in 2020? It's easy to have big increases from a bad baseline.

To reiterate a point I made early on in the thread.

 

[Loren Pechtel]

Qasim Rashid, Esq. on Twitter: "
Chipotle: 26% profit increase. Raising prices.
Starbucks: 31% profit increase. Raising prices.
McDonalds: 59% profit increase. Raising prices.
Shell/Mobile/BP: 60% profit increase. Raising prices.
There's not a labor shortage.
This isn't inflation.
It is 100% corporate greed." / Twitter
But it creates inflation.

Profit increases are looking to the past. That doesn't say the profit is going to be sustained with what's been happening to labor recently.

Furthermore, looking at the financials for Chipotle I find:

The GAAP effective tax rate was negative 21.1% in 2020

I'm not an accountant so I'm not going to try to figure out exactly what happened. However, it's pretty obvious they were hammered by Covid in 2020. Of course their profit went up in 2021! This does not in any way support his conclusions.

(Note that I simply checked the first one, I didn't dig into the others.)

 

[Swammerdami]

As far as increasing profits in 2021, what were the profits in 2020? It's easy to have big increases from a bad baseline.

Is this a rhetorical question? If not, let me help you Google.

The 'CP' in the URL stands for 'Corporate Profits':

Corporate Profits After Tax (without IVA and CCAdj)

Graph and download economic data for Corporate Profits After Tax (without IVA and CCAdj) (CP) from Q1 1947 to Q2 2023 about CCADJ, IVA, corporate profits, tax, corporate, GDP, and USA.

fred.stlouisfed.org

As you can see, annual corporate profits (after tax) plummeted all the way to $1.6T in 2020 before rebounding to $2.7T in Q3 2021. But was $1.6T really so very low? It was higher than at any time under Bush-43 and only fractionally lower than during the Obama boom. Study the graph again and see if you can admit that the high profits in 2021 are the "big story."

Here's a profit margin graph that may be more informative: This statistic rose to 10% for the very first time in history during the Obama boom and is now (Q3 2021) sitting at 15.6%. Compare, with little words, the number 15.6% with the 8% average under Bush-43. (To be clear, these are margins on value ADDED. The graph seems to show that non-financial U.S. corporations made due with after-tax margins of merely 2% to 3% during the 1950's, 60's and 70's. Am I missing something?)

Profit per unit of real gross value added of nonfinancial corporate business: Corporate profits after tax with IVA and CCAdj (unit profits from current production)

Graph and download economic data for Profit per unit of real gross value added of nonfinancial corporate business: Corporate profits after tax with IVA and CCAdj (unit profits from current production) (A466RD3Q052SBEA) from Q1 1947 to Q2 2023 about CCADJ, IVA, corporate profits, value added...

fred.stlouisfed.org

Do I detect a pattern of feigned ignorance about simple stats? In another thread a graph of crime rates was posted. The graph covered many decades; one saw a gradual increase in crime peaking under Reagan-Bush41; then beginning in the Clinton boom a gradual decline until 2019 when the graph ended. There are various reasons why such a graph might end before the present year, but if the trend DID reverse it would be a tiny glitch-like movement. Yet there was a question about the 2020 and 2021 stats as though a poster thought the crime rate might suddenly have tripled!

 

[lpetrich]

Forbes on Twitter: "INFLATION: Rep. @AOC (D-NY) speaks about the role of corporate profiteering in exacerbating inflation, particularly in regards to rent and groceries. (vid link)" / Twitter
Posted Mar 8, 2022, from a Congressional hearing.

AOC talked about private-equity companies buying up housing and then either flipping it or renting it out at "exorbitant" amounts. She asked a hearing witness about this, and he said that this is about housing stock changing hands without a change in supply. AOC then continued with how private-equity companies often focus on minority and low-income areas. I think because they don't have to spend as much to buy housing as in more affluent areas.

She then asked another witness about that, Demond Drummer of New Consensus, someone whom I recognized from appearing with her in the Green New Deal national town hall of spring 2019. He pointed out that it was indeed the case. He called what is happening "a series of market failures".

AOC then mentioned the possibility of a public institution that purchases distressed real estate and transfers it to the social housing sector, like cooperatives, land trusts, and the like. But Chairwoman Carolyn Maloney noted that AOC's time was up, and at 5 minutes, indeed it was.

 

[lpetrich]

Katie Hill on Twitter: "Taking joy at being able to hire people at lower wages because they’re struggling more but thinking you have a culture that attracts good workers is some psycho shit." / Twitter

More Perfect Union on Twitter: "LEAKED EMAIL: Applebee’s franchise exec says that rising gas prices are great for business because the chain can offer workers lower wages.

“Most of our employee base and potential employee base live paycheck to paycheck… the labor market is about to turn in our favor.” (pix link)" / Twitter
Where do they think that their customers' money comes from? Money trees?

More Perfect Union on Twitter: "The CEO of Dine Brands, which owns Applebee’s, took home an estimated $6.7 million in 2021.
The company increased weekly sales 12.6% from 2019 and reported $19.8 million in net income last quarter.
The CEO also told CNBC it’s looking to replace workers with robots: (vid link)" / Twitter
then
More Perfect Union on Twitter: "Dine Brands CEO John Peyton has said that the pandemic has made Applebee’s and IHOP stronger. The CEO makes over 1000 times as much as the median compensation of an Applebees workers. Applebee’s servers take home about $17.16 per hour, including tips, per @Indeed." / Twitter
then
More Perfect Union on Twitter: "@indeed Dine Brands is part of the National Restaurant Association, which lobbied heavily against a minimum wage.
According to One Fair Wage, the National Restaurant Association contributed $125,000 to lawmakers who opposed the Raise The Wage Act." / Twitter

Kerri Bingham wants to go diving on Twitter: "@MorePerfectUS @indeed Best decision I ever made was leaving @IHOP . I was a training manager and they started treating their employees like total shit once Julia took over. All she wanted was to buy out Applebee’s cuz she was pissed that they wouldn’t promote her. She got her wish." / Twitter
then
Kerri Bingham wants to go diving on Twitter: "@MorePerfectUS @indeed @IHOP They also started insisting that we make the servers report every single dime made in tips so that they didn’t have to pay them to make up for the difference in “tipped credit” wages of $2.13/hr. Especially in states like S Carolina, Georgia and Tennessee." / Twitter

DoubleM on Twitter: "@MorePerfectUS @indeed I believe it was the late Herman Cain who made that agreement when he was the president of the National Restaurant Association. Which is why I found it a bit difficult to shed many tears when he went to that big restaurant in the sky." / Twitter

Someone retweeted that video clip of Sen. Kyrsten Sinema giving a very theatrical thumbs down to a minimum-wage increase.

 

[lpetrich]

Salem Snow on Twitter: "@vote4robgill @Applebees I used to work at Applebee’s and this is not just one individual who has an anti-worker mindset - it’s almost all of them.

When I was promoted to manager-in-training they had meetings about which workers they wanted to fire and would plan how they were going to set them up." / Twitter

Salem Snow on Twitter: "@vote4robgill @Applebees Applebee’s frequently mistreats minority workers and even allowed one guest to verbally abuse & harass my partner - she used homophobic slurs and threatened him with physical assault. Guess what Applebee’s did about it?

They said it was “part of the job”." / Twitter

Salem Snow on Twitter: "@vote4robgill @Applebees Applebee’s told me that in order to succeed in their business, I would need to abandon my humanitarian and socialist views. This occurred after I had objected to setting up employees to get illegitimately fired.

Applebee’s knows they are anti-worker. They don’t want you to know." / Twitter

Nev on Twitter: "@Salem4Congress Can you explain what "illegitimately fired" means?
How do they set these things up? I'm curious about the anti-worker mechanisms of big chains like these places" / Twitter

Salem Snow on Twitter: "@NevRavenoak For example, Applebee’s mgmt would change the work schedule in the middle of the week after it had already been posted, throw out the original schedule, and then they wouldn’t notify workers and then accuse them of not showing up for shifts they weren’t originally schedule for" / Twitter

Salem Snow on Twitter: "@NevRavenoak They would gaslight workers into thinking they were being fairly fired. I noticed this pattern before I got to mgmt bc whenever I had conflict with mgmt, it would happen. At first I thought I was making mistakes but then I started taking pics of my schedule & saw it was changing." / Twitter

humanclock on Twitter: "@Salem4Congress @NevRavenoak Ah, or the @redrobinburgers thing were the GM fired a hostess because she was not attractive. Official reason was because she was "late" one day. I'll never forget her sobbing in the parking lot. I'm still pissed at myself 30 years later for not saying something." / Twitter

 

[Derec]

Salem Snow on Twitter: "@vote4robgill @Applebees I used to work at Applebee’s

So one part of mystery from the other thread solved, I guess.

But he is shitting so much on his former employer in his tweets I cannot imagine anybody would want to hire him after this. And cushy $174k/a congressional career a la AOC is out of reach at the moment. Too bad, so sad.

What does this minor former candidate's hatred of Applebee's have to do with inflation though?

 

[Derec]

More Perfect Union on Twitter: "LEAKED EMAIL: Applebee’s franchise exec says that rising gas prices are great for business because the chain can offer workers lower wages.

Oh, now I see the reason for that bastard's (last name of Snow after all!) angry tweet storm against Applebee's.
I do not see that statement as sinister. In the aftermath of the pandemic, there was a huge labor shortage, particularly in hospitality industry, and businesses had to raise wages, offer bonuses etc. just to attract enough people, and even then they were often shorthanded. So this email is merely hoping to a return to some sort of sustainable status quo ante, because the current situation is not really sustainable.

 

[ZiprHead]

More Perfect Union on Twitter: "LEAKED EMAIL: Applebee’s franchise exec says that rising gas prices are great for business because the chain can offer workers lower wages.

Oh, now I see the reason for that bastard's (last name of Snow after all!) angry tweet storm against Applebee's.
I do not see that statement as sinister. In the aftermath of the pandemic, there was a huge labor shortage, particularly in hospitality industry, and businesses had to raise wages, offer bonuses etc. just to attract enough people, and even then they were often shorthanded. So this email is merely hoping to a return to some sort of sustainable status quo ante, because the current situation is not really sustainable.

Why?

Revenue of $233.6 million more than doubled from $109.7 million last year and beat the FactSet consensus for $228.2 million. Domestic systemwide same-store sales at Applebee's rose 102.2%, while at IHOP, the rise was 120.1%. Compared with 2019, Applebee's was up 10.5% while IHOP was down 3.4%.

Applebee's parent Dine Brands swings to a profit

Dine Brands Global Inc. reported second-quarter net income totaled $28.7 million, or $1.69 per share, after a loss of $134.8 million, or $8.33 per share last...

www.marketwatch.com

 

[lpetrich]

$10 toothpaste? U.S. household goods makers face blowback on price hikes | Reuters - Mar 1

"We're seeing significant price hikes on virtually every item consumers purchase," said U.S. Representative David Cicilline, who is working on proposed antitrust legislation aimed at bringing down prices. "They're imposing real hardships. People are taking things out of their grocery carts because it’s too expensive."

In the past, major retailers such as Walmart Inc (WMT.N) pushed back on price hikes. But now, retailers like Walmart and Target Corp (TGT.N) are mostly going along with them, though they are still trying to undercut rivals and protect their market share when possible.

...
In an interview with Reuters, Cicilline cited Colgate as an example of a company touting price hikes, making basic items too costly, and paying out more to investors.

Colgate expects its margins to widen this year, due in part to higher prices. It also bought back almost 50% more shares last year, a boon for investors.

Raising prices is a "key capability" for Colgate that will help drive profit growth, Wallace said last week.

 

[lpetrich]

Biden lays out plan to fight inflation | The Hill

The first part of his plan was an acknowledgment that the Federal Reserve “has a primary responsibility to control inflation.” Biden, without naming former President Trump directly, said that his predecessor “demeaned the Fed” and argued that he won’t do that.

The second part involved making goods more affordable for families with a focus on high gas prices. His administration has blamed Russia’s invasion into Ukraine for the high price of gas and Biden touted the release from global oil reserves and called on Congress to pass clean energy tax credits.

...
The third part of the president’s plan involved reducing the federal deficit through “common-sense reforms to the tax code.”

“We should level the international taxation playing field so companies no longer have an incentive to shift jobs and profits overseas. And we should end the outrageous unfairness in the tax code that allows a billionaire to pay lower rates than a teacher or firefighter,” he said.

 

[Jimmy Higgins]

Gas popped up to $4.80 in NE Ohio. This is notably higher than in 2007/08 right before the Great Recession. I think it peaked at $4.20 or $4.30. And oil was near $130 a barrel. We had a shortage on supply, and now it is costing a small mint to move things.

OPEC I think is still trying to regain losses from the pandemic, and it is costing a lot of people a good deal of money across the board. Add Russia to the mix and it is a full on mess that feels like the 1920s and people trying to get their own settled. But unlike the late 20s, employment is still good, people are quite comfortable quitting their jobs for other jobs.

 

[TV and credit cards]

$10 toothpaste? U.S. household goods makers face blowback on price hikes | Reuters - Mar 1

...
In an interview with Reuters, Cicilline cited Colgate as an example of a company touting price hikes, making basic items too costly, and paying out more to investors.

Colgate expects its margins to widen this year, due in part to higher prices. It also bought back almost 50% more shares last year, a boon for investors.

OMFG. I can't believe it. Who would have expected such a thing?

This teenager. That's who.

The article seems to be implying that when inflation does kick in, players in the supply chain take advantage by adding a little extra for themselves, knowing they can hide behind “inflation”. Wow. Sounds like something that’s been going on since the dawn of greed. I think I sniffed this out when I was a teen in the seventies. Thank you Senator Warren for bringing to light something that has been know of and should have been fixed centuries ago.

I need to buy a couple new cookie sheets but they're $150 each so I'm only buy one. Belt tightening. Cutting out the excesses. That's key during these inflationary times.

By the way, Pepsodent at Walgreens is only seventy-nine cents.
Yes, apparently they still sell Pepsodent.

 

[Jimmy Higgins]

$10 toothpaste? U.S. household goods makers face blowback on price hikes | Reuters - Mar 1

...
In an interview with Reuters, Cicilline cited Colgate as an example of a company touting price hikes, making basic items too costly, and paying out more to investors.

Colgate expects its margins to widen this year, due in part to higher prices. It also bought back almost 50% more shares last year, a boon for investors.

OMFG. I can't believe it. Who would have expected such a thing?

This teenager. That's who.

The article seems to be implying that when inflation does kick in, players in the supply chain take advantage by adding a little extra for themselves, knowing they can hide behind “inflation”. Wow. Sounds like something that’s been going on since the dawn of greed. I think I sniffed this out when I was a teen in the seventies. Thank you Senator Warren for bringing to light something that has been know of and should have been fixed centuries ago.

I need to buy a couple new cookie sheets but they're $150 each so I'm only buy one. Belt tightening. Cutting out the excesses. That's key during these inflationary times.

Yeah, but I needed to replace my carpet, preferably before Xmas at my place due to my elderly cat's final pee off all over it. I also needed to replace a leaking roof.

Some people don't get to choose when larger things actually have to be replaced. Luckily my dryer got replaced last summer. Yes, we can pull the belt buckle a bit tighter. But in America, I think many already had it tight.

Driving, we live close to work, my wife is about 3 mins from her's, I'm 5 miles from mine. I can't imagine commuting like I did when interning and needing to fill up twice a week with gas this high.

 

[bilby]

I need to buy a couple new cookie sheets but they're $150 each so I'm only buy one. Belt tightening. Cutting out the excesses. That's key during these inflationary times.

That’s exactly wrong.

When inflation is high, you should buy stuff now, because it will cost more later.

Buy one for $150 today, and another for $200 next year; Or buy two for $150 each today, and still have $50 to spend next year. It’s not a hard choice.

Of course, if you only need one for the indefinite future, buying two is daft regardless of the rate of inflation.

 

[Derec]

That’s exactly wrong.
When inflation is high, you should buy stuff now, because it will cost more later.

But if you forego a purchase, it will not cost you at all.

Buy one for $150 today, and another for $200 next year; Or buy two for $150 each today, and still have $50 to spend next year. It’s not a hard choice.

It is if you had to spend the $150 already because food and gas got more expensive.

Of course, if you only need one for the indefinite future, buying two is daft regardless of the rate of inflation.

It could be that he needs two but could make do with one. Needs are seldom binary, that you either need something or not. It's more like a continuum - how bad do you need it?

 

[Derec]

Gas popped up to $4.80 in NE Ohio. This is notably higher than in 2007/08 right before the Great Recession. I think it peaked at $4.20 or $4.30. And oil was near $130 a barrel. We had a shortage on supply, and now it is costing a small mint to move things.

Oil price is only one factor among many that determine the price of gas you pay at the pump. What about refining cost? Or transportation cost? Gas station markups?

OPEC I think is still trying to regain losses from the pandemic, and it is costing a lot of people a good deal of money across the board.

That is certainly part of what is going on. But Russia/Ukraine mess is the biggest driver I think. In addition I think KSA and OPEC in general do not have much, if any, space capacity left at least not in short term.

 

[Derec]

Biden lays out plan to fight inflation | The Hill

One of the main drivers of inflation was the federal government pumping too much money into the economy. Part of it was necessary to fight the effects of COVID shutdowns, but things like extended unemployment (which was horribly designed to begin with!) and eviction moratorium went on too long. The student loan pause is also going on too long - it should have ended a year ago! So that's one thing he could do. Have people start paying their student loans again, and they'll have less money chasing goods and services, which should cool down inflation somewhat.

 

[Jimmy Higgins]

Biden lays out plan to fight inflation | The Hill

One of the main drivers of inflation was the federal government pumping too much money into the economy.

No, it was supply. We had a supply crunch when demand started getting back to normal. Then we had a shipment crunch, not enough people to move everything. And now oil is through the roof making every involved more expensive.

The US Government didn't pump much money into the economy when one considers how much the economy deflated due to the pandemic. The Government was trying to keep things from being lower, not expanding faster.