A new report shows that corporate profit increases drove inflation in the last 6 months. Or did it? The answer is no. Please watch the video and subscribe on YouTube!
TODAY'S EPISODE(1166):
VIDEO TRANSCRIPT:
Nate Thurston: Oh, we had some inflation. That happened over the last few years. And there's been this narrative that is of course true, you can't question it whatsoever, that it's actually something called greedflation. That is actually driven by corporate profits. And in fact, I have a news article headline from just a few days ago here from The Guardian.
The news headline is, Half of recent U. S. inflation Is due to high corporate profits report fines. So we got this new report and they found that half of the recent inflations do the corporate profits. Let's see a little bit of what they're talking about. A new report claims resounding evidence shows that high corporate profits are a main driver of ongoing inflation and companies continue to keep prices high, even as their inflationary costs drop the report compiled by the progressive groundwork collaborative think tank found corporate profits accounted for about 53 percent of inflation.
During last year's second and third quarters, profits drove just 11 percent of the price growth in the 40 years prior to the pandemic, according to the report. I would like to see what they grew in other two quarter periods of time and not a 40 year average of time. They took
Chuck Thompson: two very specific quarters.
But what's funny is It's, it's not even 53%.
Nate Thurston: They're not even the main driver. No. They're, you might've heard me say that corporate profits are the main driver of ongoing inflation, but an important point is that it says corporate profits are a main driver. Of ongoing inflation and what they decided to ignore what that they don't mention in this article Is that corporate profits are the number two driver of ongoing inflation for those two quarters for those two?
Chuck Thompson: Yes specific for those very two specific
Nate Thurston: quarters many other quarters as well Also when it comes to this specific, but before
Chuck Thompson: we get not to mention how much how much money did companies lose? And the quarters prior to that, it
Nate Thurston: doesn't matter. It doesn't matter when the, when the economy was shut down.
Chuck Thompson: Yes. And do the profits that they vastly made even make up for the losses that they had the two years
Nate Thurston: prior, let's get a little bit further into this. This comes from groundwork collaborative, which is a progressive think tank. Okay. They say new research found that corporate profits drove over one third.
Of inflation since the pandemic now, they've busted it down to one third in the actual study the news headlines grabbed Two quarters from the actual study that came out. So that's another important thing to remember groundwork collaborative By the way who they are their analytical and strategic approach allows us to drive narrative And policy change with credibility, expertise, and impact.
So they are literally trying to drive the narrative. And let me show you an example of how they're driving the narrative. If you go to their website, they give you a list of all the recent times their work has been used in the news. And so this is pretty cool. You look at this study that they're referencing right now and look at all the article headlines from business news study, 53 cents of every dollar of inflation, it's another way of saying 53%, but, um, every dollar of inflation over the last six months is due to greed.
Inflation. Now that's not true because the study was for quarters two and three. That's not the last six months, uh, for anyone since this article came out seven days ago. Here's another one. Daily costs. Yep, all that inflation is largely corporate greed. Here's another one from Truthout. Greedflation accounts for 53 cents of every dollar of inflation in the past six months.
Also not what the study said. Here's some more from the Huffington Post report. Claims inflation was driven largely by corporate greed. From Fortune.
Chuck Thompson: And people are only going to read these headlines. They're not going to dive
Nate Thurston: into The first thing they put is that they're trying to drive the narrative.
Fortune says greedflation caused more than half of last year's inflation surge, study finds. That's not true, by the way, from NewsNation, corporate profits account for half of U. S. inflation. Report, uh, we talked about the Guardian, half of recent U. S. inflation due to high corporate profits. Daily Beast says corporate greed is driving recent inflation.
Report finds Common Dream says analysis shows how corporate profits drive inflation even as business costs go down. Okay, and then I want to look at the actual study for a second,
Chuck Thompson: if you don't mind. That's the thing, you have to look at the actual
Nate Thurston: study. We'll look at the Look at the numbers that all of these articles are referencing, but all of them left out something very important.
In this study, they start off by saying, Inflation has come down significantly from its peak over the past year, yet prices remain high for American consumers. They start off by being idiots, by the way. There's a, uh, I, I paused this commercial earlier so I could show it to my wife, but it was an Ikea commercial.
And in this Ikea commercial, they're saying, Oh, it seems like things just don't make sense these days. Inflation's down, but prices are still high. Well, why would inflation be down and prices still be high? Because inflation is still an increase of prices. Inflation coming down doesn't mean the prices came down.
It means the rate at which prices are increasing came down. But they're still increasing. So this actual IKEA commercial said, things just aren't making sense these days. Inflation is down, but prices are still high. Nope. That makes sense. That's literally the science behind it. You need deflation for prices to go down.
Inflation means increase basically. So that's, that makes sense. Let's get onto some of the actual numbers here. Here's the important part. This is what all the people used to write their articles and to write their headlines saying that corporate profits drove half of U. S. inflation or 53 cents of every dollar.
The Guardian said that it was a main driver of inflation and in fact it was a main driver. In this study, they look at three drivers of inflation. They look at labor, so labor costs for companies, non labor and profits. The non labor will be things like supply expenses, material expenses, and then profits.
And so if inflation goes up by a dollar, if there's a dollar price increase, What amount of that dollar is due to either labor costs, supplies, materials, or profits that the corporation is making? That's what this is asking. What they find is that mostly the increase has come from labor, not from profits.
The actual study itself shows that the increase per dollar of inflation was Mostly from labor costs, not from corporate profits, even in
Chuck Thompson: the quarter that they're referencing. Yes.
Nate Thurston: They're even when they talk about those past six months where they referenced quarter two and quarter three of 2023, which is not the past six months.
Cause there's a quarter four also. And we're currently in quarter one of 2024. So it's, you know, like the past year, actually only the first six months of the past year. It doesn't make for a great headline. I get it. All right. But in that. Time period, this gets a little bit confusing, but it isn't, it is, it does help if you think about this as a dollar of increased costs.
Okay, so where does that come from? You first have to take note that the non labor, so the materials, was actually minus 27 percent. It came down during this time. So if you're trying to make it to a dollar and one of these segments is minus 27, Remember, we're going to think about this as cents. So if one of these is minus 27, that means you're actually minus 27 cents and you're trying to make it up to a dollar.
That's important because what they found that the profits contribution to inflation was 53 percent and that's what all the news. article headlines went with. But the labor contribution was 73 percent. And remember, non labor was minus 27. You put all that together and you get up to your dollar. So this actual study, I read you nine article headlines.
We're all talking about half of inflation coming from corporate profits. 53 cents of every dollar comes from corporate profits. The actual study itself above where it says 53 percent says that labor was 73 percent meaning that it was more. I don't know if you, everyone caught that, but that's more, that's like 40 percent actual higher.
Then what profits were, and in fact, uh, since 2021, the profits contribution was 21%. The labor contribution was 53 percent since 2020. That number is at 30 for profits and 45 for labor. Since you're telling
Chuck Thompson: me that like, if we pay people more money. Um, that the price of goods is going to increase.
Nate Thurston: Mm hmm.
Yeah, it's a cost and it adds to the price of our goods. I mean, I thought
Chuck Thompson: people would just, the prices would stay the same. And if you raised people up to a living
Nate Thurston: wage, now they just pay people more and they would just be able to live. It does seem like that's not at all what would happen. No, that's. And that's not what happens actually.
Well, what this points
Chuck Thompson: out easily is that the value of things roughly stay the same. The reason why things cost more is because. There's more dollars in circulation. So the more money that you put in circulation, the higher, the higher price everything gets. It's still a similar value.
Nate Thurston: You could think of it as you're willing to pay a certain percentage of your money towards food.
And food costs, what everyone is saying, they are willing to pay a certain percentage of, of their money that they have. Let's make it easy and just say 10%. 10%. What happens when everyone gets way more money? Well, they're still willing to pay 10 percent of their money for food. But now they, everyone has way more money.
And so therefore the price of food is either able to go up or it's driven to go higher, uh, by all of these different factors, but that's what actually happens. The percentage that you're willing to pay is what you mean by value. Like it has the same, that food has the same value to me. As it did back in 2020 or as it did back in 2015, like I need it to live, you know, that's important But the amount that i'm paying for it is going up.
It's just a high. It's just a just a higher dollar amount But maybe the same percentage of my money i'm willing to pay for it. So anyhow what you found from all of this Is that all of those headlines, and I didn't read every article, but I did read the Guardian article. All of those headlines picked one of the things to go after because this one think tank, this progressive think tank, who specifically says at the top of their page that they're trying to drive narrative and policy change, decided to highlight the corporate profits contribution and ignore the labor contribution.
And the labor contribution, the labor increase, Was actually higher than the profits that people were making off of each dollar of increase that we all saw what we've seen is Statistically, it's been the workers that have added to the increase in the price of your goods
Chuck Thompson: Well, okay, even that is just a symptom of the actual problem
Nate Thurston: more money being in circulation.
Yeah
Chuck Thompson: Regardless of what modern monetary theorists will tell you when the government prints money it leads to inflation
Nate Thurston: Oh, I had some inflation. That happened over the last few years. And there's been this narrative that is of course true, you can't question it whatsoever, that it's actually something called greedflation. That is actually driven by corporate profits. And in fact, I have a news article headline from just a few days ago here from The Guardian.
The news headline is, Half of recent U. S. inflation Is due to high corporate profits report fines. So we got this new report and they found that half of the recent inflations do the corporate profits. Let's see a little bit of what they're talking about. A new report claims resounding evidence shows that high corporate profits are a main driver of ongoing inflation and companies continue to keep prices high, even as their inflationary costs drop the report compiled by the progressive groundwork collaborative think tank found corporate profits accounted for about 53 percent of inflation.
During last year's second and third quarters, profits drove just 11 percent of the price growth in the 40 years prior to the pandemic, according to the report. I would like to see what they grew in other two quarter periods of time and not a 40 year average of time. They took
Chuck Thompson: two very specific quarters.
But what's funny is It's, it's not even 53%.
Nate Thurston: They're not even the main driver. No. They're, you might've heard me say that corporate profits are the main driver of ongoing inflation, but an important point is that it says corporate profits are a main driver. Of ongoing inflation and what they decided to ignore what that they don't mention in this article Is that corporate profits are the number two driver of ongoing inflation for those two quarters for those two?
Chuck Thompson: Yes specific for those very two specific
Nate Thurston: quarters many other quarters as well Also when it comes to this specific, but before
Chuck Thompson: we get not to mention how much how much money did companies lose? And the quarters prior to that, it
Nate Thurston: doesn't matter. It doesn't matter when the, when the economy was shut down.
Chuck Thompson: Yes. And do the profits that they vastly made even make up for the losses that they had the two years
Nate Thurston: prior, let's get a little bit further into this. This comes from groundwork collaborative, which is a progressive think tank. Okay. They say new research found that corporate profits drove over one third.
Of inflation since the pandemic now, they've busted it down to one third in the actual study the news headlines grabbed Two quarters from the actual study that came out. So that's another important thing to remember groundwork collaborative By the way who they are their analytical and strategic approach allows us to drive narrative And policy change with credibility, expertise, and impact.
So they are literally trying to drive the narrative. And let me show you an example of how they're driving the narrative. If you go to their website, they give you a list of all the recent times their work has been used in the news. And so this is pretty cool. You look at this study that they're referencing right now and look at all the article headlines from business news study, 53 cents of every dollar of inflation, it's another way of saying 53%, but, um, every dollar of inflation over the last six months is due to greed.
Inflation. Now that's not true because the study was for quarters two and three. That's not the last six months, uh, for anyone since this article came out seven days ago. Here's another one. Daily costs. Yep, all that inflation is largely corporate greed. Here's another one from Truthout. Greedflation accounts for 53 cents of every dollar of inflation in the past six months.
Also not what the study said. Here's some more from the Huffington Post report. Claims inflation was driven largely by corporate greed. From Fortune.
Chuck Thompson: And people are only going to read these headlines. They're not going to dive
Nate Thurston: into The first thing they put is that they're trying to drive the narrative.
Fortune says greedflation caused more than half of last year's inflation surge, study finds. That's not true, by the way, from NewsNation, corporate profits account for half of U. S. inflation. Report, uh, we talked about the Guardian, half of recent U. S. inflation due to high corporate profits. Daily Beast says corporate greed is driving recent inflation.
Report finds Common Dream says analysis shows how corporate profits drive inflation even as business costs go down. Okay, and then I want to look at the actual study for a second,
Chuck Thompson: if you don't mind. That's the thing, you have to look at the actual
Nate Thurston: study. We'll look at the Look at the numbers that all of these articles are referencing, but all of them left out something very important.
In this study, they start off by saying, Inflation has come down significantly from its peak over the past year, yet prices remain high for American consumers. They start off by being idiots, by the way. There's a, uh, I, I paused this commercial earlier so I could show it to my wife, but it was an Ikea commercial.
And in this Ikea commercial, they're saying, Oh, it seems like things just don't make sense these days. Inflation's down, but prices are still high. Well, why would inflation be down and prices still be high? Because inflation is still an increase of prices. Inflation coming down doesn't mean the prices came down.
It means the rate at which prices are increasing came down. But they're still increasing. So this actual IKEA commercial said, things just aren't making sense these days. Inflation is down, but prices are still high. Nope. That makes sense. That's literally the science behind it. You need deflation for prices to go down.
Inflation means increase basically. So that's, that makes sense. Let's get onto some of the actual numbers here. Here's the important part. This is what all the people used to write their articles and to write their headlines saying that corporate profits drove half of U. S. inflation or 53 cents of every dollar.
The Guardian said that it was a main driver of inflation and in fact it was a main driver. In this study, they look at three drivers of inflation. They look at labor, so labor costs for companies, non labor and profits. The non labor will be things like supply expenses, material expenses, and then profits.
And so if inflation goes up by a dollar, if there's a dollar price increase, What amount of that dollar is due to either labor costs, supplies, materials, or profits that the corporation is making? That's what this is asking. What they find is that mostly the increase has come from labor, not from profits.
The actual study itself shows that the increase per dollar of inflation was Mostly from labor costs, not from corporate profits, even in
Chuck Thompson: the quarter that they're referencing. Yes.
Nate Thurston: They're even when they talk about those past six months where they referenced quarter two and quarter three of 2023, which is not the past six months.
Cause there's a quarter four also. And we're currently in quarter one of 2024. So it's, you know, like the past year, actually only the first six months of the past year. It doesn't make for a great headline. I get it. All right. But in that. Time period, this gets a little bit confusing, but it isn't, it is, it does help if you think about this as a dollar of increased costs.
Okay, so where does that come from? You first have to take note that the non labor, so the materials, was actually minus 27 percent. It came down during this time. So if you're trying to make it to a dollar and one of these segments is minus 27, Remember, we're going to think about this as cents. So if one of these is minus 27, that means you're actually minus 27 cents and you're trying to make it up to a dollar.
That's important because what they found that the profits contribution to inflation was 53 percent and that's what all the news. article headlines went with. But the labor contribution was 73 percent. And remember, non labor was minus 27. You put all that together and you get up to your dollar. So this actual study, I read you nine article headlines.
We're all talking about half of inflation coming from corporate profits. 53 cents of every dollar comes from corporate profits. The actual study itself above where it says 53 percent says that labor was 73 percent meaning that it was more. I don't know if you, everyone caught that, but that's more, that's like 40 percent actual higher.
Then what profits were, and in fact, uh, since 2021, the profits contribution was 21%. The labor contribution was 53 percent since 2020. That number is at 30 for profits and 45 for labor. Since you're telling
Chuck Thompson: me that like, if we pay people more money. Um, that the price of goods is going to increase.
Nate Thurston: Mm hmm.
Yeah, it's a cost and it adds to the price of our goods. I mean, I thought
Chuck Thompson: people would just, the prices would stay the same. And if you raised people up to a living
Nate Thurston: wage, now they just pay people more and they would just be able to live. It does seem like that's not at all what would happen. No, that's. And that's not what happens actually.
Well, what this points
Chuck Thompson: out easily is that the value of things roughly stay the same. The reason why things cost more is because. There's more dollars in circulation. So the more money that you put in circulation, the higher, the higher price everything gets. It's still a similar value.
Nate Thurston: You could think of it as you're willing to pay a certain percentage of your money towards food.
And food costs, what everyone is saying, they are willing to pay a certain percentage of, of their money that they have. Let's make it easy and just say 10%. 10%. What happens when everyone gets way more money? Well, they're still willing to pay 10 percent of their money for food. But now they, everyone has way more money.
And so therefore the price of food is either able to go up or it's driven to go higher, uh, by all of these different factors, but that's what actually happens. The percentage that you're willing to pay is what you mean by value. Like it has the same, that food has the same value to me. As it did back in 2020 or as it did back in 2015, like I need it to live, you know, that's important But the amount that i'm paying for it is going up.
It's just a high. It's just a just a higher dollar amount But maybe the same percentage of my money i'm willing to pay for it. So anyhow what you found from all of this Is that all of those headlines, and I didn't read every article, but I did read the Guardian article. All of those headlines picked one of the things to go after because this one think tank, this progressive think tank, who specifically says at the top of their page that they're trying to drive narrative and policy change, decided to highlight the corporate profits contribution and ignore the labor contribution.
And the labor contribution, the labor increase, Was actually higher than the profits that people were making off of each dollar of increase that we all saw what we've seen is Statistically, it's been the workers that have added to the increase in the price of your goods
Chuck Thompson: Well, okay, even that is just a symptom of the actual problem
Nate Thurston: more money being in circulation.
Yeah
Chuck Thompson: Regardless of what modern monetary theorists will tell you when the government prints money it leads to inflation