Inflation and Corporate Profits

We are all experiencing the effects of inflation. It’s the worst it has been in the U.S. since 1980. And it’s not just in the U.S., it’s a worldwide problem. Some people, mainly Republican politicians, blame the Biden Administration. Others blame a variety of contributing factors — supply-train issues, conflicts in the Middle-East and Ukraine, and of course, Covid.

One factor that many people believe is the root cause of inflation is corporate profiteering. Corporate profits have been rising since 2002 but have increased substantially since 2020.

The following graph shows historical trends in inflation rates and corporate profits from 1960 to 2021. There’s quite a bit of contextual information that is needed to even begin to understand these patterns, like U.S. political leadership and world events. But, those analyses will require explanations from many experts documented in dozens of books. And the data needed for the analyses are yet to be collected. We are only part of the way through the second year of rising inflation. There is much more to come.

Data Sources

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

Inflation rates: https://www.usinflationcalculator.com/inflation/historical-inflation-rates/