In a hearing before the Senate Banking Committee on Tuesday, Federal Reserve Chair Jerome Powell said that corporations may be raising prices arbitrarily to pad their profits while the public suffers under high inflation rates.
Powell said that higher prices for commodities like groceries could be chalked up to corporate greed, at least partially. This statement echoes recent research that shows that businesses are seeing some of their highest profit increases since 1950, using inflation as an excuse to reach further into consumers’ pockets.
The statement came as the result of prodding from Sen. Elizabeth Warren (D-Massachusetts). During a confirmation hearing for Powell’s renomination to lead the most powerful financial institution in the country, Warren questioned whether or not the Fed chair believed that corporations were fleecing customers as corporate concentration is on the rise.
“Does that increase in profit margins combined with greater market concentration in industry after industry suggest to you that some corporations may be passing along increased costs and, at the same time, charging more on top of that to fatten their profit margins?” Warren asked.
“That could be right. It could also just be, though, that demand is incredibly strong and that they’re raising prices because they can,” Powell said.
“Well, that’s the point. They’re raising prices because they can and not being competed down,” Warren responded. Consumers aren’t just offsetting inflation for raw materials for corporations, she pointed out – they’re also paying more out of pocket.
This isn’t the first time Warren has brought attention to the issue. In December, the Massachusetts lawmaker sent a letter to large grocers that have been raising prices, expressing similar concerns regarding inflation. Kroger, Publix and Albertsons have been reporting high profits as grocery bills have increased by over 6 percent on average over the past year, Warren wrote.
Reporters have pointed out that fears about inflation may be overstated, however. As Hadas Thier wrote for Truthout, wages are currently rising at a similar rate to inflation – meaning that worries about inflation, as sensationalized by conservative lawmakers and the media, could be a tool for corporations to create conditions for price gouging.
During the hearing, Powell sounded the alarm on inflation, saying that it could throw a wrench into the country’s economic recovery from the pandemic and potentially hamper jobs recovery. This hearing comes ahead of January’s inflation report, which the Financial Times reports is expected to show the consumer price index rising annually by 7 percent.
Powell also claimed during the hearing that the country no longer needs policies that were put into place as protection against the financial impact of the pandemic. During his tenure, Powell rolled back measures that were intended to protect the economy after the Great Recession, which has led economists to question whether he intends to protect consumers or whether he would rather throw favor to Wall Street through deregulation.
Lawmakers, including Warren, have repeatedly criticized decisions that the Donald Trump nominee made during his tenure. But President Joe Biden renominated the Fed chair despite warnings that Powell hasn’t been doing enough to address the climate crisis and that he has a poor record on financial regulation.
Truthout Is Preparing to Meet Trump’s Agenda With Resistance at Every Turn
Dear Truthout Community,
If you feel rage, despondency, confusion and deep fear today, you are not alone. We’re feeling it too. We are heartsick. Facing down Trump’s fascist agenda, we are desperately worried about the most vulnerable people among us, including our loved ones and everyone in the Truthout community, and our minds are racing a million miles a minute to try to map out all that needs to be done.
We must give ourselves space to grieve and feel our fear, feel our rage, and keep in the forefront of our mind the stark truth that millions of real human lives are on the line. And simultaneously, we’ve got to get to work, take stock of our resources, and prepare to throw ourselves full force into the movement.
Journalism is a linchpin of that movement. Even as we are reeling, we’re summoning up all the energy we can to face down what’s coming, because we know that one of the sharpest weapons against fascism is publishing the truth.
There are many terrifying planks to the Trump agenda, and we plan to devote ourselves to reporting thoroughly on each one and, crucially, covering the movements resisting them. We also recognize that Trump is a dire threat to journalism itself, and that we must take this seriously from the outset.
Last week, the four of us sat down to have some hard but necessary conversations about Truthout under a Trump presidency. How would we defend our publication from an avalanche of far right lawsuits that seek to bankrupt us? How would we keep our reporters safe if they need to cover outbreaks of political violence, or if they are targeted by authorities? How will we urgently produce the practical analysis, tools and movement coverage that you need right now — breaking through our normal routines to meet a terrifying moment in ways that best serve you?
It will be a tough, scary four years to produce social justice-driven journalism. We need to deliver news, strategy, liberatory ideas, tools and movement-sparking solutions with a force that we never have had to before. And at the same time, we desperately need to protect our ability to do so.
We know this is such a painful moment and donations may understandably be the last thing on your mind. But we must ask for your support, which is needed in a new and urgent way.
We promise we will kick into an even higher gear to give you truthful news that cuts against the disinformation and vitriol and hate and violence. We promise to publish analyses that will serve the needs of the movements we all rely on to survive the next four years, and even build for the future. We promise to be responsive, to recognize you as members of our community with a vital stake and voice in this work.
Please dig deep if you can, but a donation of any amount will be a truly meaningful and tangible action in this cataclysmic historical moment.
We’re with you. Let’s do all we can to move forward together.
With love, rage, and solidarity,
Maya, Negin, Saima, and Ziggy