Comment by 303uru

2 years ago

They didn't have to call up their peer. I feel like I'm going crazy everytime I read, "but that not how macroeconomics works!!!"

WE LITERALLY WATCHED IT IN REAL TIME. Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it. Trump was dumping $8T into the economy, business leaders also knew that. The supply chains started to clear up, but demand wasn't waning despite high prices. Throughout the entire thing anyone sitting on investor calls was hearing "highest profits in company history" over and over again.

Almost as if all that sociology about people behaving coherently without direct communication might have been on to something.

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303uru

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Manuel_D  2 years ago

> Covid caused supply chain issues, unaffected supply chains independently raised prices because people were willing to pay it.

But that's not "greedflation". That's literally a normally functioning market. If Company A and Company B produce a largely interchangeable product, and 50% of Company A's output is lost due to shortages both companies are going to sell their products at a higher price point. The fact that Company B's output was unaffected doesn't change the fact that their product is now in more demand due to Company A's production shortfall.

After the supply chain issues eased, people had loads of savings from the lockdowns. This is a big reason why companies were seeing record profits in the post pandemic period: because people were spending in record numbers. Is it surprising to see record profits in a period of record spending?

  • acdha  2 years ago

    “Greedflation” would be when those companies kept prices up after their supply chain had returned to normal. Competition will chip away at that but that’s going to be slow if you’re in a market with only another megacorp trying the same thing.

    • Manuel_D  2 years ago

      But has demand gone down? The gummed up supply chains created a lot of pent up demand. It's going to take a while to satisfy that demand. Compounding this, pandemic checks injected a massive amount of dollars into the economy [1].

      It's simplistic, but take this analogy. A factory builds 1,000 doodads per year. COVID shut it down for a year. Then after COVID it starts producing 1,100 doodads per year. It's going to take 10 years to satisfy the pent up demand. Of course the real world is more complicated, but the fact that prices remain high after the supply chain issues are resolved isn't at all indicative of nefarious or anti competitive behavior.

      1. https://fred.stlouisfed.org/series/M2SL

  • tome  2 years ago

    Correct. It's pretty sad to see such fundamental lack of understanding of economic principles.

KennyBlanken  2 years ago

There's been over a year of quarterly earnings calls where executives have told investors about falling supply chain costs and when asked if prices would drop have laughed.

Trump also slashed corporate taxes and taxes for the ultra-wealthy, which certainly didn't help.

  • 000ooo000  2 years ago

    Yeah there was even a video compilation circulating (posted here IIRC) of recent earnings calls where the CEOs all said "blah blah great opportunity to increase prices". Surprising to read comments in here that seem to hold a sentiment along the lines of "companies are just doing what they gotta to get by".