According to an analysis from the Groundwork Collaborative, "corporate
profits drove 53 percent of inflation during the second and third quarters of 2023 and
more than one-third since the start of the pandemic." In the four decades prior to the pandemic, corporate profits contributed to just 11% of price increases.
Corporations should not be able to dramatically increase their profit margins by increasing prices because competitors should step in with lower prices. So, what's going on?
It's possible for corporate profits to be used productively to fuel innovation and growth. But that doesn't appear to be happening. Economist Christian Weller notes that corporations are using their record profits "mainly to pay dividends to their shareholders and building up their stockpiles of cash."