The All-Inclusive Kamala Harris thread

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[BurtReynolds]

Democrats are about to convince a huge number of people that inflation isn't real, and that's pretty funny to me.

[doug rr]

good morning, Burt

[BurtReynolds]

Good morning, Doug

[doug rr]

what's for breakfast?

[tragabigzanda]

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[BurtReynolds]

what's for breakfast?

Bagel, cream cheese. Same as every day.

[4/5]

In 2023, grocery store profit margins were 1.6%.

At face value, this looks unsustainable, right? Is that your point?

No. Of course they can be doing well with extremely tight margins because they're volume-based.

My point is that the assertion that they are engaging in "price gouging" is absurd. For every $101.60 you spend at the grocery store, $100 of it is covering their costs. Your state and local governments likely have higher margins on what you spend at grocery stores than the store itself does.

And then the suggestion that this alleged price gouging explains the inflation of the last four years....and that price controls (which we have at least a hundred years of empirical evidence that they don't work!) are the solution to inflation and said alleged price gouging is too much.

[dimejinky99]

I’m not suggesting that price changes at the grocer aren’t impacted by things like supply chain issues, money supply, elasticity, etc. I’m just taking issue with the 1.6% figure I’ve seen recently as a sort of defense of grocery stores. The big grocery store owners have been doing great with 1.6% (obviously their staff would like higher wages).

A commission here has told our gov the minimumwage needs to increase hy at least 1euro an hour to handle inflationa nd cost of living. Retailers assosciation right out the gate screaming this kill their margins and drive rents up (even further) and around we go.

Those in the mid to high end of everyday goods and services capitalism in your community are doing great, but somehow the ones holding it all up and keeping it going, arent allowed do even a little better, otherwise they whole ssytem falls down and falls apart.
Maybe the system as is, isnt a great one to base a society on, or maybe we just need to get rid of or at the very least drastically limit how much those at the top end are making off it? and make them take the hit and not the customers, and prevent them from being able to stop any wage progress for low earners, without whom it all falls apart anyways?

I'm sliding into my James Connolly era.

[tragabigzanda]

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[4/5]

I've seen such conflicting takes on all this, even with conflicting numbers; this Reuters article cites a profit margin of 7% for the first three quarters of 2023. One persistent challenge is that the news outlets fail to identify whether these margins are EBIT, EBITDA, EPS, etc.

I certainly don't buy, at face value, that the entire grocery industry is colluding to maintain increased prices as supplies have returned to normal levels; I'd be more inclined to believe that producers have maintained higher wholesale prices, particularly for niche/premium products, but that's more a hunch than a data-backed argument.

I read the article and maybe I missed it, I scrolled through it four or five times but I was frustrated they didn't appear to link to the FTC statement or whatever it was. I'm sure they defined their terms in a way that would allow for better discussion.

I admit what I'm going to say about that 7% isn't very authoritative, but grocery profit margins are notoriously razor thin. I've taught for years about it being a sector with some of the very tightest margins, almost always between about 1 and 3%. So the 1.7% number fit squarely in that. A quick Google search seemed to reveal lots of sources saying essentially that, but I agree things need to be defined so that we can know what we're talking about.

Putting that aside, my main contentions are that 1) long-run inflation is not caused by corporate greed and that 2) price controls do not work and will make consumers worse off, not better.

Ultimately the idea of Federal price controls is a political football aimed squarely at the so-called "felt economy." I have no opinion on whether or not such controls will pass legal muster, but as a bit of political messaging from a new candidate just a few months before an election, it's pretty attractive.

Both candidates and parties are completely untethered from economic reality at this point, offering up some group to demonize (corporations or immigrants/foreigners) with supposed solutions that make people (regular normal people) poorer (price controls, tariffs, walls/deportations, etc.) but they sound attractive as long as people don't think too hard.

[tragabigzanda]

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[Bi_3]

Assuming that high prices have been maintained in bad faith, I believe some measure of Federal regulation may be warranted; but again, I have no idea if it's actually legal.

Why would they go down? Low inflation is still inflation and nothing can erase the higher inflation of the last few years.

[tragabigzanda]

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[Bi_3]

Assuming that high prices have been maintained in bad faith, I believe some measure of Federal regulation may be warranted; but again, I have no idea if it's actually legal.

Why would they go down? Low inflation is still inflation.

In theory, they'd go down because the supply chain is operating at capacity again*, thus the supply is stronger, thus prices could relax -- not to pre-pandemic prices, but to something "more affordable" while still maintaining the historical margins for the seller. Given the product and pricing mix of a grocery store, I have to assume there's room in their pricing strategy -- or more likely the pricing from their wholesalers -- to maintain a more affordable cost on staple items, and to generate stronger revenues on premium products.

*I have no idea if that's true, but that seems to be one of the implications of some of the "research" and reporting happening around all this.

I have no idea either, and historically that would make sense, but it doesn't seem to address the changes in M1/M2 we saw during and after COVID: https://mises.org/power-market/how-much-did-they-print

[B]

Just a microcosm of what I think is the problem:

Kroger's, by FAR the nation's largest grocery chain, annual profits were about $26 billion in 2018 and 2019. (oh woe to them with the pitiful 1.6% profit margin)
They jumped to $30 billion in 2021 and a projected $33 billion in 2024.

In that time the percentage of Americans' budget devoted to vote drastically increased.
That's the biggest grocery chain pulling extra money out of our pockets (which we don't have to give) to ensure growth. Not to maintain profits, to GROW profits.

I am sure semantics will show me how this is not what you would call "inflation," but it IS bullshit, and if Republicans want to fight for Kroger's right to enrich their shareholders while more and more of us resort to the Ramen and banana diet, I'm sure votes will be pouring in.

https://www.macrotrends.net/stocks/char ... e_vignette

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