I don’t really care what the Labor Departments says about Inflaction declining…..
I don’t care about Federal Bankers working with Jerome ….
The price of ga around my way is creeping UP…..
So is the price of pizza….
My wife says egg prices came down….
But anyone I know looking for new is pissed at the loss of ‘deal’s…..
And dinner for a afamily ay McDonald’s costs $30 now…..
For ALL those trying to0 sell me on ‘the economy is getting better’…..
It ain’t happening….
Companies are NOT doing what Jwermoe and Fed think they’s do…..
They went up after the pandemic to grab their profits back and they are STILL running with the higher prices even if their costs HAVE dropped….
They used to call this ‘price gouging’.….
Oh, Joe Biden IS taking a hit for this in his polling numbers and he keep saying ‘things are better’ but most Americans do NOT belive THAT….
“Rockets and feathers” is economists’ name for how prices change in some less-than-competitive markets. When companies’ input costs go up for some reason, the prices they charge their customers go up like a rocket. When their input costs go back down, their prices fall, but ever so slowly, like a feather. The example most of us can relate to is the retail price of gasoline.
At least in the feather scenario, retail prices do go down. What’s worse for consumers is when companies simply don’t cut their prices in response to lower costs, and enjoy higher profit margins as a result. There are signs of that beginning to happen now in the U.S. market, at least in some segments.
This week I interviewed Samuel Rines, an investment strategist at Corbu L.L.C. in Houston. Rines said he coined the term “price over volume” in June 2022 to describe how companies were fighting higher costs at the time. Revenue equals price times volume, of course. If a company could manage to raise its price by a big percentage and have its volume go down by only a small percentage, it would increase its revenue, offsetting its higher costs.
Some people called that profiteering or greedflation, but to Rines it was just good business. “If you’re profit-maximizing you’re going to do that and you should do that,” he told me.
Profit margins grew, as an article in The Times this year showed. Now, though, he said, they could grow even more. He’s coined another term: “price and margin.” Some key input costs have fallen, and customers aren’t agitating for lower prices because they’ve become inured to paying more. “The next year is going to be a completely different level. The interaction of price increases and input cost deflation is powerful,” he wrote in a follow-up email.
True, a business could try to grab market share by slashing prices, but few chief executives are willing to play that game. “Businesses will be much more resistant to lowering their prices based on two to three months of declining costs” because they think the decline might be temporary, Rines said. “They’re afraid they’re going to get whiplashed.”….