Where will inflation stop?

In reply to Duke :

The numbers discussed have not been cherry-picked, 2019 was not a bad year for most companies or out of line with prior trends. There have been relatively short periods of higher profit margins, but that soon returned to normal until the pandemic. Look at any of the big food companies and you'll see a pretty ordinary 2019 and then significantly higher profit margins after or even during the pandemic. The macrotrends site Boost_Crazy linked to is very handy for this:

https://www.macrotrends.net/stocks/charts/TAP/molson-coors-beverage/net-income

The numbers for grocery stores in particular are pretty damning:

https://www.fmi.org/our-research/supermarket-facts/grocery-store-chains-net-profit

Next, onto my own opinions, even though I should be able to argue for veganism while wearing a leather jacket and eating a ham sandwich. I don't think that profit of almost any kind is unreasonable, but I do think that there is such a thing as a reasonable profit margin, and when a business has a fairly steady historical profit margin keeping things running along in a relatively healthy way, and increases it 3~4x within the span of a year or two, that's unreasonable.

I do think that today's IP laws are largely batE36 M3 crazy, mostly made for the benefit of large studios and the biggest pop stars, but I don't think that artists shouldn't be able to copyright their material at all.

In reply to GameboyRMH :

Companies are entitled and expected to be profit seeking, it's literally why they exist. I will not call someone a profiteer for a 4 percent net income.

So you are angry at them for doing what they are built to do.

Yet government, who even you admit have contributed to the problem, is acting in opposition to what they are supposed to do, and your position is to give them more power and trust me this time the government will totally do the right thing.

Doesn't seem like a very logically solid foundation to your argument.

The government will not actually be accountable to voters until more voters quit following the finger pointing to the other party, evil corporations, or whatever today's boogie man is and realize where the real problem lies.

I kind of agree with you Steven_Jones. I have two approaches, in my personal life I will do whatever it takes to succeed in whatever the given system is, but I also pay attention and participate in politics to hopefully make a small difference and better the environment I find myself and others in.

Boost_Crazy said:

I think you are misunderstanding cause and effect.

Corporate profits margins are exceeding inflation. Okay. But then you jump to it must be greed. Back up a minute. What is inflation? 
 

A general increase in prices and fall in the purchasing value of money.

There are many factors that drive inflation.  Monetary policy, scarcity, demand, and yes, increase in profitability- greed, among others. All of these manifest themselves with the same end result- higher prices. So to use that end result- higher prices- as evidence of the cause is false logic. That some industries are have higher rates of inflation during an inflationary period is a must. Without that, we wouldn't have rising inflation in the first place. The very definition of inflation is the increase in prices. To have an increase in the rate of inflation, someone needs to increase prices at a greater rate. Since some industries have more impact on products used by a broad section of the economy- energy and food like you mentioned- they tend to drive inflation. It's also not a coincidence that those same industries operate at the lower end of the profit margin spectrum. They have to raise their prices, as they can't absorb rising costs as easily as other industries. So since the very mechanism of inflation usually results in those industries driving inflation, it's way overly simplistic to just call it greed.

I can understand inflation causing gross numerical profits to increase, but why should inflation cause profit *margins* to increase, especially by such a disproportionate ratio to inflation? If they raise their prices just to keep up with inflation then the profit margins should remain roughly the same, even while profits increase. I could also understand a slight beyond-inflation profit margin increase leading and causing inflation, but 50~300% profit margin increases, even from low levels, seems highly excessive. That leads back to a greed scenario of taking extra money because they can rather than raising prices just to keep up with costs increased through inflation.

In reply to frenchyd :

Chevy Trax because you say "America no longer build cars, just trucks or SUV's  that require a 6+ year loan to make the payments affordable"

I point out an affordable car, so now you say "what about this one?"

Sorry you made bad choices, and feel that is someone elses fault.  Like I have said a few times in this thread, you can either make excuses or make E36 M3 happen. Hopefully your excuses make you feel better, but they're still excuses.

Opti said:

In reply to GameboyRMH :

Companies are entitled and expected to be profit seeking, it's literally why they exist. I will not call someone a profiteer for a 4 percent net income.

So you are angry at them for doing what they are built to do.

Yet government, who even you admit have contributed to the problem, is acting in opposition to what they are supposed to do, and your position is to give them more power and trust me this time the government will totally do the right thing.

Doesn't seem like a very logically solid foundation to your argument.

The difference is that democratic government can do things other than maximize profit, such as taking actions for the good of a society. You used the analogy of arsonists complaining that trees are so flammable, it's more like people who fight forest fires but also drop cigarette butts sometimes around trees that spontaneously combust as part of their normal life cycle* complaining that the trees keep catching fire. They cause the fires sometimes, sure...but the trees would still do it all on their own if left untouched.

*Not as biologically farfetched as you might think, look up pyrophilic plants!

In reply to GameboyRMH :

It sounds like you've never been in any type of management role in a business. Profit margins change all then time, for thousands of reasons. They go up and they go down. Companies seek to maximize them, and sometimes they fail. You pick a bad year and compare it to a decent one to show a massive delta thinking it proves something.

Also you think with money being worth less, which we all agree on here, companies are only entitled to make the same margin, even though it's now worth less?

So what happens if a companies runs at a loss and becomes profitable? That delta would look crazy on your graph. Got to get the government involved right? They are only entitled to maintain their losses or improve them by close to the inflation rate, right?

Your graph only pointed out improvements, what about all the companies that headed in the wrong direction for profit margins? Are they now forced to stay lower, it's essentially what you are recommending.

I hate that you make me defend massive corporations because generally I don't like them, but your argument has such a terrible logical basis that I have to.

Let's say you have a fictional company and a fictional currency, doubloons or dubs for short, the company grossed 1100 dubs per year, had to spend 1000 in that year and pays zero taxes on it like Amazon for simplicity, that would be a 10% profit margin. Next, dubs are affected by inflation, now they're only worth 1/10th as much. The company had to spend 10,000 dubs, made 11,000, but its profit margin is the same 10%. They're making the same amount of profit, inflation-adjusted. Why would they need to make a higher profit margin to keep up?

I also don't see that 2019 was a bad year. I understand that profit margins can be noisy, especially quarter-to-quarter, but 2019 looks like an economically normal year overall and in particular for the big food companies in question.

GameboyRMH said:

In reply to Duke :

The numbers discussed have not been cherry-picked, 2019 was not a bad year for most companies or out of line with prior trends.

Yes, they absolutely HAVE been cherry-picked.  This was demonstrated within about 5 posts of your latest reopening of this idiotic thread.  I bolded the important parts below:

Boost_Crazy said:

In reply to GameboyRMH :

Instead of hand-waving away the article based on a theory held up by suppositions, try to find data to prove or disprove the theory. That's what I did, and found this graph comparing pre-pandemic to post-pandemic profit margin growth:

Why were those limited, largely unrelated companies chosen? Are they representatives of their markets, or are the outliers? What about 2020? Is 2019 a representative year? Again, at best, this is just a poor sample size. At worst, these examples were chosen because they fall well beyond the norm of their markets. 

I looked at Coors since it was at the top of the list. The graph is not showing the change in net revenue, but change in the margin percentage. Which is very misleading. Looking at the graph, you would think they were doing well. In reality, it was just an average year being compared to a poor year. Here are the real numbers going back to 2015. 2016-2018 were all better than any year since. They had a poor 2019, lost money in 2020, rebounded in 2021, lost again in 2022. So we chose to highlight the increase from 2019-2021?

Full info here, sorry for the formatting of the data below...

Coors Net Income

Molson Coors Beverage Annual Net Income
(Millions of US $)

2022     $-175

2021     $1,006

2020     $-949

2019     $242    <====== This is a normal year, how, exactly?

2018     $1,117

2017     $1,566

2016     $1,594

2015     $395

GameboyRMH said:

In reply to Duke :

I do think that today's IP laws are largely batE36 M3 crazy, mostly made for the benefit of large studios and the biggest pop stars, but I don't think that artists shouldn't be able to copyright their material at all.

My apologies; on that topic I must have you confused with a different person.

In reply to Duke :

So because Coors had a poor year you're considering all the data about all the other companies to be tainted by cherry-picking, thus disproving the wider trend?

Opti said:

In reply to GameboyRMH :

It sounds like you've never been in any type of management role in a business. Profit margins change all then time, for thousands of reasons. They go up and they go down. Companies seek to maximize them, and sometimes they fail. You pick a bad year and compare it to a decent one to show a massive delta thinking it proves something.

Also you think with money being worth less, which we all agree on here, companies are only entitled to make the same margin, even though it's now worth less?

So what happens if a companies runs at a loss and becomes profitable? That delta would look crazy on your graph. Got to get the government involved right? They are only entitled to maintain their losses or improve them by close to the inflation rate, right?

Your graph only pointed out improvements, what about all the companies that headed in the wrong direction for profit margins? Are they now forced to stay lower, it's essentially what you are recommending.

I hate that you make me defend massive corporations because generally I don't like them, but your argument has such a terrible logical basis that I have to.

ALL OF THIS.

All of it.

In reply to GameboyRMH :

What wider trend? You showed us a couple of cherry picked companies, in a E36 M3ly framed article.

GameboyRMH said:

In reply to Duke :

So because Coors had a poor year you're considering all the data about all the other companies to be tainted by cherry-picking, thus disproving the wider trend?

Coors is the company that was singled out with that big angry 300% line.

That line was generated by picking two specific data points that maximized the outrage it could generate.  Doesn't bode well for the rest of the "conclusions" drawn from that set of data.

The maker of that graph - and by extension you - are making the assertion that corporate profits are growing at an excessive rate.

The very first, flagship data point that was investigated proved that assertion to be disingenuous at best, and purposefully misleading at worst.

I'm not the one making the assertion.  It is up to the person making assertion to prove it to others.  This graph patently fails in that responsibility.

In reply to GameboyRMH :

That fictional company is also still paying employees at pre-inflation wages because times are tough. And increasing costs to try and stay ahead of where they predict inflation going, so costs are trying to keep pace or even slightly lead inflation. Also, times are tough so some staff was laid off, cutting the company's payroll by a noticeable percentage. It sounds like the company is doing the only thing anyone could ever ask them to do, hoover doubloons out of the pockets of the average scoundrel to line their iron-banded booty-chests. 

You can't possibly be suggesting that this fictional company, made up of and staffed by citizens of a society, has a social responsibility. Don't be outrageous, if fictional companies were expected to have some kind of social conscience then how would they extract maximum profit? If you were a fictional business owner living high on a fictional hog thanks to your savvy business skills you would understand why business just can't operate any other way.

Opti said:

In reply to GameboyRMH :

It sounds like you've never been in any type of management role in a business.

What gave you that idea? The fact that he has no clue how a business works?

In reply to Error404 :

There is more than one way to do business, without question.  There are lots of for-profit companies that make social responsibility an integral part of their business model.

Or feel free to found a non-profit company that does whatever good thing you think needs doing and treat your employees the way you think they should be treated.  Non-profits are not prevented from manufacturing products or providing services.  Knock yourself out.

Just don't expect it to be anything but fairly marginal, if it survives at all.

Duke said:

GameboyRMH said:

In reply to Duke :

So because Coors had a poor year you're considering all the data about all the other companies to be tainted by cherry-picking, thus disproving the wider trend?

Coors is the company that was singled out with that big angry 300% line.

That line was generated by picking two specific data points that maximized the outrage it could generate.  Doesn't bode well for the rest of the "conclusions" drawn from that set of data.

The maker of that graph - and by extension you - are making the assertion that corporate profits are growing at an excessive rate.

The very first, flagship data point that was investigated proved that assertion to be disingenuous at best, and purposefully misleading at worst.

I'm not the one making the assertion.  It is up to the person making assertion to prove it to others.  This graph patently fails in that responsibility.

 

Have a look at the other companies in the same graph (and I would encourage checking out other large food companies as well), using the tools at the links I provided earlier. Right now it sounds like you're accusing the data of being cherry-picked by cherry-picking the company that had a bad year in 2019...

In reply to GameboyRMH :

I'm taking the one that was presented first, foremost, and most accusingly.

In reply to GameboyRMH :

I can understand inflation causing gross numerical profits to increase, but why should inflation cause profit *margins* to increase, especially by such a disproportionate ratio to inflation? If they raise their prices just to keep up with inflation then the profit margins should remain roughly the same, even while profits increase. I could also understand a slight beyond-inflation profit margin increase leading and causing inflation, but 50~300% profit margin increases, even from low levels, seems highly excessive. That leads back to a greed scenario of taking extra money because they can rather than raising prices just to keep up with costs increased through inflation.

There are a number of reasons for higher profit margin percentage increases. As previously mentioned, your 300% example is directly a result of choosing the lowest vs. highest years. Sure there are other factors, but- why bother? It's obviously an outlier, why are we spending so much effort to paint the outlier as the norm? You need to increase your sample size and broaden your timeline to get real useable data. Unfortunately, that is simply not the goal of the articles that cater to you. So either you are interested in learning the truth, or you can keep drinking from the tainted well. 
 

On margin percentages. While a useful tool, I much prefer to look at net margin dollars, not percentage. Yes, the higher the margin percentage, the higher the net margin dollars for a given amount of sales. But it's dollars that pay the bills, not percentages. Ideally you want to maximize percentage to the point where you don't compromise on dollars. Assuming you have the capacity to produce that much. When you don't, percentage need to go up. We had, and still have, tremendous shortages and supply chain disruptions. Demand outstripped supply. Manufactures could not produce enough, so they had to raise margin on what they could sell, to chase that net margin dollar number. That is not even counting the increased costs of production, which is also factored in and gets passed along. 
 

As to my point of cherry picking individual companies instead of looking at industry averages. Companies A, B, and C make competing widgets that require computer chips. There is a shortage of chips, driving up their value and the value of products requiring those chips. Those companies are "the market" for that widget. Companies A and B used just in time manufacturing, and didn't have a lot of chips in stock. They could not keep up with production, and had to raise margins to make up for the loss of sales volume. The chips they could get were also more expensive. Company C had a large stash of chips in their inventory. Since their competitors raised their prices, the market value for widgets rose. So they can sell their same widgets at higher prices. Plus they bought their chips when they were much cheaper, so their margin is even higher. So why not just keep their prices the same and crush their competition? For one, they can't just celebrate that they have cheap chips in stock and pretend that nothing has changed. They have to order more chips- at higher cost- to replace the ones they sold in widgets. They have to sell based on their replacement cost. Their supply is not infinite, they will eventually be in the same position as their competitors. But they will get a nice bump in their margin for that year. Then the other side of the hump comes. They don't know when, but eventually things will normalize. And they will be sitting on a pile of expensive chips that they bought when prices were inflated. The market will drop back down, as supply has returned to normal and the replacement costs have dropped. Margin that year will take a hit. You need to see this whole picture before passing judgement based on percentages. 

In reply to GameboyRMH :

No, he picked the FIRST COMPANY ON THE LIST. When the first one, with the largest angry red bar is misleading, I'm not wasting my time with the rest of it. They've shown that they are trying to stir the pot of some anti-capitalistic whatever. You want to keep using that link as your example, YOU need to put in the effort to prove to the rest of us it's not bullE36 M3. 

In reply to GameboyRMH :

Have a look at the other companies in the same graph (and I would encourage checking out other large food companies as well), using the tools at the links I provided earlier. Right now it sounds like you're accusing the data of being cherry-picked by cherry-picking the company that had a bad year in 2019...
 

Well here is #2 on this list...

Procter & Gamble Annual Net Income
(Millions of US $)

2022$14,461

2021$14,035

2020$12,764

2019$3,634

2018$9,485

2017$15,079

2016$10,253

2015$6,777

2014$11,390

2013$11,068

I was curious about Land O Lakes. It's kind of strange that it's on this list, as it's a Co-op rather than a traditional company. 
 

Net revenue in $millions 

2022 $248

2021 $295

2020 $205

2019 $254

2018 $314

2017 $244

I don't see a smoking gun. Of note, in 2020 they kicked a Native American off their box but kept her land, not sure how that affected profits for 2021. 

Steve_Jones said:

If you worry about yourself vs trying to find someone to blame, politics don't really matter. Lot's of successful people on this board have been successful through 5 Presidents or more, and multiple changes in the government. Multiple people on this board have been "victims" through 5 Presidents or more, and multiple changes in the government. Maybe look in the mirror first.

If you fail to see areas that America can improve, it's because you aren't looking.     
  We have a duty to force improvements through elections.   That's what being a citizen in a free country requires.  Educate yourself,  vote, and participate. 
     Even if you disagree with me please vote, please participate. 
    It costs $2 here to run for Mayor or city council.  I don't know where you live but it won't be a lot more expensive.   
 Most of the laws and rules that will affect you are  local.  Be part of that selection process.