Economic justice advocates on Wednesday responded to new U.S. government figures showing nonfinancial corporate profits soared to record levels during the third quarter of 2022 by urging congressional lawmakers—most of whom receive substantial corporate campaign contributions—to take action against the capitalist greed that progressive experts say is the main driver of inflation.
“Instead of raising interest rates and slowing the economy toward a recession, Congress and Biden should be taking aim at corporate price gouging.”
The U.S. Commerce Department’s Bureau of Economic Analysis reported nonfinancial sector corporate profits of $2.08 trillion during the third quarter, up from just under $1.9 trillion during the same period last year, $1.6 trillion in Q3 2020, and $1.37 trillion from July-September 2019.
Wednesday’s figures follow similar record second-quarter profits of $2.07 trillion, as well as a 15.5% increase in Q2 after-tax profits as a share of gross value added for non-financial corporations—the biggest margin since 1950.
“Today’s record corporate profits mirror what we have been hearing on earnings call after earnings call: Corporations are gleefully reporting that their strategy to burden families with unnecessary price hikes is working,” Rakeen Mabud, chief economist and managing director of policy and research at the Groundwork Collaborative, said in a statement. “Powerful corporations in concentrated industries will keep prices sky high until lawmakers rein them in.”
Numerous analyses, including a report released earlier this month by the U.S. House Subcommittee on Economic and Consumer Policy, have shown that corporations are using soaring inflation as a pretext for consumer price gouging.
Meanwhile, U.S. Federal Reserve Chair Jerome Powell said Wednesday that the Fed will continue to raise interest rates—albeit at a slower pace—in a continuation of the central bank’s inflation-fighting strategy.
“Despite some promising developments, we have a long way to go in restoring price stability,” Powell stated during an event at the Brookings Institution in Washington, D.C. “We will stay the course until the job is done.”
Progressive economists and politicians stressed that corporate greed is the real culprit behind high prices, with former U.S. Labor Secretary Robert Reich tweeting Tuesday that “instead of raising interest rates and slowing the economy toward a recession, Congress and [President Joe] Biden should be taking aim at corporate price gouging.”
Speaking earlier this month, U.S. Sen. Elizabeth Warren (D-Mass.) said, “Of course the Fed has a role to play in getting inflation under control, but there is a big difference between landing a plane and crashing a plane.”
The watchdog group Accountable.US asserted Wednesday that “Corporate greed is driving inflation. As rising costs take a massive toll on American families, companies are raking in record profits and bragging about their sky-high prices.”
The next Fed rate hike—which Powell said could come as soon as December—would be the seventh of the year. Earlier this month, the central bank raised interest rates by 0.75% for the fourth consecutive time.
New polling from Navigator Survey found that a majority of respondents believe that the government should focus on “cracking down on corporate greed and price gouging” over “stopping wasteful government spending and handouts.”
“Our economic crisis isn’t inflation, it’s corporate greed,” U.S. Sen. Bernie Sanders (I-Vt.)—who earlier this year introduced legislation that would impose a windfall corporate profit tax of up to 95% on companies with more than $500 million in annual revenue—argued earlier this month.
“You don’t reduce inflation by giving tax breaks to billionaires and cutting benefits for the elderly, the sick, the children, and the poor,” Sanders contended. “You combat inflation by taking on corporate greed and passing a windfall profits tax. You combat inflation by taking on the power of the insurance companies, the drug companies, the fossil fuel industry, the giant food companies and lowering the outrageously high costs of healthcare, prescription drugs, gas, and groceries.”