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Comment by adamsmith143 | Hacker News Reader

There's a reason why corporate profits are at all time highs. they're just pushing any inflation related costs and more directly to consumers and scraping even more profit off the top.

This is actually just not even controversial, completely supported by data.

https://fred.stlouisfed.org/series/CP

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That may be the case, but that should allow a new competitor to come in and offer lower priced goods.

Yeah, starting a new local grocer or even national grocery chain is pretty easy, right? Why don't you lead the charge.

Because I have no incentive to do so? I could, certainly, but until this deal proves rotten there is no impetus for action.

Why would you not expect nominal profits to be at all time highs if the purchasing power of the currency goes down?

Nominal profits would have to increase for profit margins (which are already low single digits for grocery stores) to be maintained.

You’re being downvoted and all you’ve done is state fact!

Are _margins_ increasing (I don’t know) - because that would be the required condition to conclude nefariousness.

Hilarious what gets downvoted on HN.

Inflation since Jan 2020 is 15% according to BLS.

If corp profits go up 15% the real profit increase is 0%

People are upset that wages aren't keeping up with inflation, but profits are. The rest is bad expression of that idea.

Some businesses’ profits are keeping up with inflation, and some are not. Grocery stores sell relatively inelastic goods at already low profit margins, so there is not much room to not keep up with inflation. The other option for them would be going out of business.

> Why would you not expect nominal profits to be at all time highs if the purchasing power of the currency goes down?

Purchasing power doesn't magically decrease, it's a function of increasing prices.

Think about for a little. If a companies input costs have increased by 10% their profit will decrease right, maybe not by 10% but it will decrease. So if they increase their prices they can get back to their previous profit level. Instead they have increased prices even more such that their profit is HIGHER than it was before inflation.

QED

There is a term for that, called profit margin. And profit margins have not materially increased.

https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m...

https://www.macrotrends.net/stocks/charts/ACI/albertsons/pro...

Obviously, a 3% profit margin after a year of inflation is going to be nominally higher than a 3% profit margin before the year of inflation.

Hence any whining about nominal increases in profit is innumeracy, or clickbait, especially for businesses that play in the sub 5% profit margin ranges.

How low do people think grocery store profit margins should go? Have they tried successfully operating a business at 3% profit margin?

This would be a cute reply if the data supported your idea. But it doesn't.

https://www.bloomberg.com/news/articles/2022-08-25/us-corpor...

Highest margins since 1950.

Turns out there are businesses that aren't Grocers.

I can't believe you're being downvoted

If they were at all time highs the stock market would not be done so much.

The stock market hasn't been connected to reality for years. Companies which produce nothing and are deep in debt have high stock value purely on basis of speculation. Most companies that report layoffs, tough times etc also report record levels of profit because it's not enough to be profitable, you have to go well above and beyond profit. You have to squeeze out everything even at the cost of short term stability.

Which companies that produce nothing and are deep in debt have shown growth in market cap?

From what I can tell, the biggest gains have been at companies that have very strong profits and prospects due to high barriers of entry to their business, and the companies with steady but small profits do okay, and the companies not earning any profits have shown losses.

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