As you finish your last-minute holiday shopping, you may notice that prices for, well, everything are higher than they were this time last year. Inflation has thankfully cooled a bit in recent months, but it’s still running hot enough to cause a tremendous amount of sticker shock this holiday season.
Our current bout of inflation is driven by a complicated confluence of factors – the war in Ukraine, COVID lockdowns in China, global supply chain bottlenecks, and sky-high demand for goods. But, as we’ve discussed in previous posts, there is one important factor behind rising prices that deserves your utmost attention as you browse the aisles over the next few days: corporate greed.
While Americans have been struggling to afford basic necessities like rent and food, corporations have been doing better than ever. In the third quarter of the 2022 fiscal year, corporations in the nonfinancial sector posted a breathtaking $2.08 trillion in combined profits. Corporate profit margins haven’t been this high since 1950.
How did this happen? Corporations have used the enormous hype over inflation to raise prices more than what would be necessary to make up for increased production costs. They’re not charging more because it’s more expensive to make things, they’re charging more because they want to inflate their profits.
According to a report from the Economic Policy Institute, over half (53.9%) of price increases can be attributed to fatter corporate profit margins alone. If you still can’t believe it, take corporate executives at their own word: they’re openly bragging about their price-gouging strategies on earnings calls with shareholders.
For this week’s Closer Look, we want to give you a rundown of a few of the greediest corporations you may want to avoid this holiday season. Before we look at those, however, we want to tell you about a new podcast from Eric Schoenberg, a member of the Patriotic Millionaires!
Eric just released “You Can’t Take It With You,” in which he tells the stories of nine of the richest men in American history and what happened to their great wealth after they died to try to understand why people want to become so rich in the first place. Covering titans of industry from John D. Rockefeller to Charles Tiffany, the founder of Tiffany and Co., “You Can’t Take It With You” is a fascinating look at extreme wealth over the ages, and we highly recommend you check it out. It’s available for free on Apple Podcasts, Spotify, or Buzzsprout.
Now back to the Closer Look!
Albertsons made headlines this year after announcing a merger with competing grocery conglomerate Kroger. This move may result in hundreds of store closures and the loss of thousands of union jobs. But before that, the private equity managers who run Albertsons are trying to strip it for parts – they want the company to direct $4 billion in dividends to its shareholders (largely wealthy investors). Where did all that money come from? From the pockets of Albertsons customers, whose higher grocery bills helped the multi-billion dollar corporation raise its profits by 90.5% over the last year. When you shop for ingredients for your holiday dinners, remember those higher price tags are the result of not an increase in costs, but a massive rise in profits going to Albertsons shareholders and executives. We hope knowing that your hard-earned money goes to lining the pockets of wealthy investors doesn’t spoil your appetite.
If you’re worried about meals over the holidays being too expensive, grocery stores like Albertsons aren’t the only culprits. General Mills, a major food conglomerate that sells thousands of products in virtually every aisle of the grocery store, has raised prices almost half a dozen times in the last year and has seen its profits increase by 15% over the last year alone. General Mills makes many household staples that Americans rely on to keep themselves and their families fed. Using inflation as a guise to balloon their own wealth is a far cry from the spirit of the holidays.
If you’re prepping your car for the upcoming winter weather, you should know that a significant portion of the costs you’re paying at the register isn’t going towards employee pay or the products themselves – it’s going to bloated company profits. Autozone profits rose nearly 12% in 2022, nearly double the level of inflation, leaving the company’s executives celebrating. Autozone CEO Jamere Jackson even bragged recently that “inflation has been a little bit of our friend.”
Last year, Dollar Tree, for the first time in 35 years, raised the base price of their goods to $1.25 and up to $5 per item, reportedly to combat inflation. While some increase could be expected, Dollar Tree has managed to increase its profits by 57% from 2020-2022. You might be best to avoid getting your last-minute “cheap” wrapping paper from the chain as a result.
A staple of the holiday dessert table, Hershey’s has taken inflation in stride and used it to shoot up their shareholder’s earnings. The sticker shock you feel this year when shopping for treats for your holiday get-togethers is caused by a 36% profit increase from 2020-2022.
Gas and Oil Companies
To the surprise of absolutely no one who has paid for gas in the last year, oil and gas companies like Chevron, ExxonMobil, Shell, ConocoPhillips, and BP are doing better than ever. In the first quarter of this year, Shell made $9.1 billion (its strongest quarter ever), ExxonMobil made $5.5 billion (double its profits from the first quarter of 2021), and Chevron made $6.5 billion (quadruple its profits from the first quarter of 2021). These five companies together netted an astounding 300% more in profits in the first quarter of 2022 compared to the year before. While gas prices have thankfully calmed down since earlier this year, oil and gas companies have already made out like bandits, and their greed is still being felt by American consumers.
As families struggle to make ends meet this holiday season, greedy corporations are doing everything they can to bring more wealth to their stockholders, and everyone else be damned. The holidays are stressful for a variety of reasons, but corporate greed should never be one of them. Congress should hold these corporations to account for their egregious profiteering through things like windfall taxes and better antitrust enforcement.
We wish you and your loved ones a peaceful, joy-filled holiday. And a “Bah Humbug!” to greedy corporate price-gougers!