CEOs sound the alarm on inflation

[Calista241]

Source: Axios

CEOs are speaking up about what we’ve seen in the government data: inflation. And some of them warn elevated levels of inflation could persist.

Why it matters: Prices for goods and services have been rising at a historic pace, a phenomenon that many economists have characterized as transitory.

...

"The inflation could be worse than people think," JPMorgan Chase CEO Jamie Dimon said on an earnings call Tuesday. “I think it'll be a little bit worse than what the Fed thinks. I don't think it's only temporary."

"[Policymakers] are saying jobs are more important than consumerism," BlackRock CEO Larry Fink told CNBC on Wednesday. "That is going to probably lead to systematically more inflation."

"Is there somewhat more inflation out there? There is," PepsiCo CFO Hugh Johnston said on an earnings call Tuesday. "Are we going to be pricing to deal with it? We certainly are."

"Will Conagra take list pricing increases? The short answer is, yes," Conagra CEO Sean Connolly said. "And we have more pricing coming."

Read more: https://www.axios.com/ceos-warn-inflation-alarm-sound-da5e2dcf-af16-4ca4-a1de-bdd03fbbe775.html

[shotten99]

1. How does he know it's not temporary?

There has been suppressed demand for most things in the market for the last 18 months and now it's the demand has increased rapidly as the economy reopens. If these invisible hand economists believe in what they preach, they'd realize the entire economy will have to stabilize by getting supply and demand back in balance. (That is, if it ever really was in balance. Try actually basing the economy on actual goods, that is capital instead of on the consumption of services. That's capitalism without capital and it isn't sustainable.)

[FreeState]

44. History, restaurants for one

When they raise their prices they rarely go back to the old price - it's too hard on their business model to do that. Consistency in price and product are key there. Almost every restaurant here has raised their prices by $1-2 per entree and .50 per app in the last month. I dont see that going back to pre-pandemic prices.

Same with most services and products. Commodities will change - as they always have (dairy, coffee, wood etc.).

[UpInArms]

2. The only "inflation" these peeps ever worry about

is wage inflation.

eom

[ShazamIam]

11. They will use this product supply caused inflation to stop the minimum wage increase.

I believe the $300/mo child payment is in lieu of a minimum wage increase, and that is as bad as the EITC, which frees the employers from paying livable wages. And the general taxpayers, those who are working, are supporting those who are underpaid and not able to find work. Tax subsidized workers for non-tax paying corporations.

[cstanleytech]

14. Maybe its time to wean corporations off government welfare and redo the corporate tax code?

[KPN]

21. Maybe it's time to simplify the tax code on corporations and set a tax

rate that applies to all corporate income without deductions. They will always lobby for the creation of subsidies and loopholes in tax code that only corporations and the wealthy can take advantage of without this. Sure, we might be able to scale them back, but they'll be clawing every tax advantage they've had right back and new ones before they've been cut back or eliminated; just like they are right now with this clamor about "inflation" (which is really about two other things: wage inflation, and paving the way for higher individual borrower interest rates).

Capitalism needs an overhaul before it destroys our society.

So does the dogmatic notion that "America is the land of opportunity"; that notion attracts, empowers and exacerbates greed and greedy behavior. America's wealth is and was based on the vast resources, ports and waterways that existed in a richly temperate continent climate-wise that was here for the taking. And it's been taken.

Okay, off my vaguely though out soap box.

[nuxvomica]

3. Do CEOs jump on any excuse to raise prices?

Yes they do.

[KPN]

23. BINGO! And they pave the way to do so by raising alarms like this now

when it can also serve to stifle substantial federal, State, and municipal and minimum wage increases.

[appalachiablue]

40. The Inflation Bogeyman, Robert Reich 7/14/21

https://robertreich.org/post/656720415116427264

[PatSeg]

37. Yes and it sounds like they

are threatening to hold consumers hostage to their demands. Greedy bastards.

[JT45242]

4. JP morgan crooks extraordinaire...

The last person that anyone should be listening is anyone from JP MOrgan ..crooks extraordinaire.

Supply is low because of disruptions in the supply chain caused by Covid for the last 17 months. As factories all over the owrld get back to working capacity so that "just in time" supply chains can work, the supply will return and normal economic forces will be at play.

The price of wood is already starting to come down. If oil stays high, like it or not, fracking will restart in the US and Canada and the supply of oil will rise and the price will fall.

They are only screaming inflation so that they can use it as a talking point to fight against raising corporate taxes.

Crooks and liars. Don't even get me started on Conagra and their monopolistic BS

[Scrivener7]

5. Inflation, for a while now, has been at historic lows. Rising from those lows "at a historic pace"

brings inflation to a middling level, historically.

[unblock]

6. Notice of course that these ceos are raising prices themselves.

They just love blaming it on inflation. Couldn't be greed or anything temporary.

it's much more politic to claim oh, my company is just an innocent victim of the horrible thing out there, we have to raise prices just to survive.

And then, of course, do the very thing that they say is do horrible. Raise prices.

[NCDem47]

12. "don't blame us! Inflation you know."

[turbinetree]

7. Jamie Dimon...and Larry Fink...

must have forgotten about when he Dimon was questioned by Rep Katie Porter (CA)...about wages...

and just to add further insult they don't even add their pay to inflation it is always the those on the bottom ladder...for good's and services....

U.S. CEO-to-worker pay ratio rose to 299:1 last year -union

https://www.democraticunderground.com/100215624996

[LittleGirl]

8. Capitalism is awesome isn't it?

There are no laws in place to control prices so it’s performing as designed.

[Hoyt]

9. Anyone who lived through late 1970's inflation should be at least mildly concerned, especially

those on a fixed income. 1970 inflation was thought "temporary" too.

Still think we are good, but it's foolish not to take note.

[Effete Snob]

15. We got this

That's why we built the strategic WIN button reserve...



...and we will resume high level talks with our global allies...

[Elessar Zappa]

16. Barring something unforeseen happening,

inflation won’t come near the levels of the late 70s.

[ShazamIam]

17. I see that in recent years that stories the inflation of the 70s fails to mention the cause,

the oil embargo of 1973 followed up by another in 1979. Wages were frozen with EITC in 1976 but prices stayed high.

[KPN]

24. Interesting thought. My sense is 2021 is a dramatically different stage -- we didn't have

a pandemic that created massive supply shortages involving complex, temporal and physical long-range international trade; we did not have a federal reserve that was open to and actually used asset purchases (QE1,2 and 3) and a zero-percent federal reserve rate for an extended period.

But I also don't have much background knowledge re: the lead-up to inflation in the 70s and early 80s.

Any sources/links you can point me to?

[Hoyt]

29. Of course it's a different era/stage. And as the economists on CNN are saying today, we don't have

a lot of experience in inflation following a pandemic.

I'm not going to discount the possibility of higher inflation, others can do so if they wish.

I can tell you this, inflation -- even a relatively small amount -- hurts people on fixed incomes and making low wages. That's a lot of people in this country.

[KPN]

31. I understand. I remember very clearly my wife and I having to pay 11% interest on our first

mortgage back in Feb. 1982. We are both retired now and living on basically a fixed income, though part of our retirement is in IRAs which could possibly grow if we keep enough invested and markets perform reasonably well. But that's not a given and rising prices are something that could well hurt us down the road.

Nevertheless, supply side economics was and is a crock in my view. The attack and outright undermining of organized labor nationally was and is an injustice against the working class. It's high time the upper crust sacrifice for the good of the little guy (and society) instead of the little guy sacrificing for the good of the upper crust -- which is exactly what has happened the past 45 years. So, I'll gladly risk the inflation and promote tax and labor policy that favors the little people. If prices go up, put more money in the pockets of the little people, not the upper crust. Tax policy and subsidies can do that.

[karynnj]

33. I paid 16 percent on my first mortgage, however the net impact was great for me

Why? The high interest rates kept the cost of houses down. The interest rate fell to less than 8 when I refinanced the 3 yr balloon. Then by the time I sold about 3 years after that, the value of that house had doubled. The reason being interest rates had declined to a point that the average buyer could pay more driving competition up for my property.

Of course, our new house also increased in cost, but the gin on the first house really increased the amount of equity we had.

[KPN]

34. Same here. My present home was paid for years ago. Low interest rates have

helped fuel, if not outright created, a housing crisis in many parts of the country. My younger son has moved back in with us because the house he had rented for 3 years was put on the market at a price he couldn't swing (i.e.,, monthly mortgage would have been substantively more that the $1300 a month a rent he was already paying) and he can't find hasn't been able to find another affordable rental.

That house that he lived in was purchased for 45% of what it sold for just 3 years ago -- shortly before he rented it. Why? Because dramatically low interest rates created a shortage of homes for sale in 2020 into 2021. My son doesn't plan on staying here long term so he was comfortable renting and never saw this coming. When he heard the house was going to be put on the market, we offered to go in on it with him to relieve some of his risk, but when the listing price came out, we were flabbergasted. Way too risky. I think there are going to be a lot of house poor people in out community in the not too distant future, especially when they get their first property tax bill.

[IronLionZion]

27. This time we know how Paul Volcker ended that inflation

he raised rates sky high to intentionally cause a recession and then recovery

https://en.wikipedia.org/wiki/Paul_Volcker#Chairman_of_the_Federal_Reserve

[George II]

35. I (almost) guarantee that we won't be seeing inflation like we did in the early '70s, when....

....interest rates approached 20% and inflation was in the vicinity of 12%.

Richard Nixon was the first President to impose wage and price controls since WWII, and that was because the government wanted to keep the cost of defeating Germany and Japan down.

[ShazamIam]

41. The 70s inflation was caused by the oil embargoes of 1973 and 1979 and wages were frozen then fixed

permanently low with the 1976 creation of EITC to support the workers of the lowest paying employers shifting their pay to the general tax fund instead of increasing the minimum wage. Followed by the 80s destruction of jobs with all the offshoring and that 1981 tax cut that sent unemployment to 11% in 82/83. Wage increase during the 8 years of Reagan. .25/hr.

[zuul]

10. My proposal: Cut CEO pay and benefits. Senior Management too.

It won't solve the problem but it's a start. Then I might start to listen to what those bloated CEO assholes have to say about jobs and consumerism.

[KPN]

26. Good luck with that. CEO's, other top level corporate/business executives and owners

are not going to volunteer that en masse -- which leaves supporting labor and substantive wage increases as the other alternative. All those business executives and owners will immediately want to maintain their personal income/profit levels which, of course, will lead to inflation and cries/pressure to undermine labor/collective bargaining/minimum wage policy.

But what you are proposing is the right way to deal with this. Make the upper crust sacrifice for the good of the nation and society rather than the little people sacrifice for the good of the upper crust.

[Calista241]

43. Even if they did, it wouldn't equalize pay, or even come close really.

There are outliers, like if Jeff Bezos just took a $1b salary, his people would be paid a lot better (and Amazon workers are already pretty well paid). But your average CEO taking a $10m pay cut and redirecting those funds wouldn't significantly improve the pay of individual workers.

[Ford_Prefect]

13. Anyone who takes advice from Jamie Dimon is digging their own financial grave.

He is without peer the most avaricious and among the most dangerous men on the planet.

[Martin68]

18. I don't believe anyone can say with certainty this is anything more than an adjustment following

more than a year of stagnation during the Covid lockdown. Hysteria could prove to be a self fulfilling prophecy. I'd suggest we clm down and let the Fed monitor this and keep us informed as to whether inflation is a bump or a trend.

[wryter2000]

22. Their you go again

Logic, reason, and asking people to remain calm. Who's going to fall for that? in case anyone missed it.

[twodogsbarking]

19. JPMorgan Chase, BlackRock, ConAgra, PepsiCo........

Consider the sources.

[wryter2000]

20. Seems to me they always say this

When government wants to do something good for middle and low income people.

[progree]

25. June 2019 to June 2021: +3.00% annualized. Feb 2020 to June 2021: +3.50% annualized

https://data.bls.gov/timeseries/CUSR0000SA0
June 2019: 255.423
June 2020: 257.282
June 2021: 270.981

June 2019 to June 2020: +0.73%
June 2020 to June 2021: +5.32%
June 2019 to June 2021 (2 years): +6.09% (+3.00% annualized)

February 2020 (the pre-pandemic CPI peak): 258.824
February 2020 to June 2021 (16 months) : +4.70% ( +3.50% annualized )

[Dawson Leery]

28. What does Blackrock do for the world???

Inflation is to be expected with pent up demand.

[peppertree]

30. ...while THEY raise the damned prices.

Isn't that special.

[KPN]

32. Raising alarms?! How about making some sacrifices for the good of the

little people for a change, rather than the other way around. CEOs and the wealthy are the culprits behind any inflation not related to pandemic caused supply shortages, not the average workers.

[Rabrrrrrr]

36. People make $tens and $hundreds of millions a year should shut the fucking fuck up.

Those assholes will never be affected by inflation - they'll just jack their salaries to keep up with it.

[ancianita]

38. Pricing can promote as well as react to inflation. This appears to be corporate vs government

control of the economy. Here are some pro-inflation ideas:

Contemporary advocacy
While few, if any, economists argue that inflation is a good thing in itself, some argue for a generally higher level of inflation, either in general or in the context of economic crises, and deflation is widely agreed to be very harmful.

Three contemporary arguments for higher inflation, the first two from the mainstream school of Keynesian economics and advocated by prominent economists,[2] the latter from the heterodox school of Post-Keynesian economics, are:

added flexibility in monetary policy;
wage stickiness; and
decreasing real burden of debt.

Added flexibility in monetary policy

A high inflation rate with a low nominal interest rate result in a negative real interest rate; for example, a nominal interest rate of 1% and an inflation rate of 4% yields a real interest rate of (approximately)[note 1] ?3%. As lower (real) interest rates are associated with stimulating the economy under monetary policy, the higher inflation is, the more flexibility a central bank has in setting (nominal) interest rates while still keeping them nonnegative; negative (nominal) interest rates are considered unconventional monetary policy and have very rarely been practiced.

Olivier Blanchard, chief economist of the International Monetary Fund, argues that the inflation rates during The Great Moderation were too low, causing constraints in the late-2000s recession, and that central banks should consider a target inflation rate of 4% instead of 2%.[2][3][4]

Wage stickiness

Inflation decreases the real value of wages, in the absence of corresponding wage rises. In the theory of wage stickiness, a cause of unemployment in recessions and depressions is the failure of workers to take pay cuts, to decrease real labor costs. It is observed that wages are nominally sticky downwards, even in the long term (it is difficult to reduce nominal pay rates), and thus that inflation provides useful erosion of real costs wages without requiring nominal wage cuts.[2][5]


Collective bargaining in the Netherlands and Japan has at times yielded nominal wage cuts, in the belief that high real labor costs were causing unemployment.

Decreasing real burden of debt

In the theory of debt-deflation, a key cause of economic crises is a high level of debt, and a key cause of recovery from crises is when this debt level has decreased. Other than repayment (paying down debt) and default (not paying it), a key mechanism of debt reduction is inflation – because debts are general in nominal terms, inflation reduces the real level of debt. This effect is more pronounced the higher the debt level.
For example, if the debt to GDP ratio of a country is 300% and it experiences one year of 10% inflation, the debt level will be reduced by approximately 300% ×10% = 30%, to 270%.
By contrast, if the debt to GDP ratio is 20%, then one year of 10% inflation will reduce the debt level by 2%, to 18%.
Thus several years of sustained high inflation significantly reduce a high level of initial debt. This is argued by Steve Keen, among others.

In this context, the direct result of inflation is a transfer of wealth from creditors to debtors – the creditors receive less in real terms than they would have before, while the debtors pay less, assuming that the debts would in fact have been repaid, and not defaulted on.
Formally, this is a de facto debt restructuring, with reduction of the real value of principal, and may benefit creditors if it results in the debts being serviced (paid in part), rather than defaulted on.

https://en.wikipedia.org/wiki/Inflationism

[NullTuples]

39. Getting older & now I'm leery of investment house CEO's making economic proclamations

They just don't seem to have anyone's best interest in mind but their own.

[3825-87867]

42. Just corporates way to blame Biden

They were pissed off because he wanted to increase taxes on corporations so all of a sudden the big guys, just by themselves with no collusion, decided to raise prices, bigley! (Also means winfall profits on top of getting 2021's "Bailout!&quot

Time for a price freeze ala the 70s. Not a wage freeze, just a price freeze, Joe. Then watch them bitch and moan.

[ProfessorGAC]

45. Most CEOs, ....

...are not experts in macroeconomics.
Even the very good ones, who run very efficient & desirable corporations.
Not sure why anybody would care what experts at marketing or operations think about macroeconomic issues?

[AllaN01Bear]

46. i d like to raise the alarm on out of control ceos salaries . i thought this was

banned during the tarp and other fiascos .