For nonfinancial corporate business sector, using price per unit real gross value added.
Figure 1: Quarter-on-quarter inflation of price of gross value added (black line), contribution of unit labor costs (blue bar), of non-labor unit costs (brown), and of profits (green). NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2023Q1 2nd release, Table 1.15, NBER, and author’s calculations.
Note that profits have added substantially, an accounting sense, to the price level of gross value added, in certain quarters (e.g., 2020Q3, 2021Q1-Q2), and deducted in others (e.g., 2020Q4)
The price of real gross value added for nonfinancial corporate business sector is not a typically cited deflator. It’s useful to compare against CPI and PCE deflator.
Figure 2: Quarter-on-quarter inflation of price of gross value added (black line), of CPI (blue), of PCE deflator (tan). NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2023Q1 2nd release, Table 1.15, BLS and BEA via FRED, NBER, and author’s calculations.
What’s the cumulative impact since the onset of the pandemic? This is shown in Figure 3.
Figure 3: Cumulative increase in price of gross value added (black line), cumulative contribution of unit labor costs (blue bar), of non-labor unit costs (brown), and of profits (green), all relative to 2020Q1. NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2023Q1 2nd release, Table 1.15, NBER, and author’s calculations.
Note that labor costs are specifically unit labor costs; hence they incorporate changes in productivity.
The picture shows that while corporate profits are not inconsequential to price level increase, they are actually smaller — in proportion — than labor costs.
Update, 6/5/2023:
Andy Glover brings my attention to this FRBKC analysis which is more extensive and careful than mine!
Source: FRBKC (2023).
“The picture shows that while corporate profits are not inconsequential to price level increase, they are actually smaller — in proportion — than labor costs.”
Profits started off as a larger part of the price increase but of late profits have been rising not so much. As suggested by the models you noted in an earlier post.
https://fred.stlouisfed.org/graph/?g=nCbA
January 15, 2018
Employment Cost Index of Private Workers for Wages & Salaries and Benefits, 2007-2023
(Percent change)
https://fred.stlouisfed.org/graph/?g=nCbB
January 15, 2018
Employment Cost Index of Private Workers for Wages & Salaries and Benefits, 2007-2023
(Indexed to 2007)
https://fred.stlouisfed.org/graph/?g=lPGy
January 30, 2018
Nonfarm business productivity and real compensation, 2007-2023
(Percent change)
https://fred.stlouisfed.org/graph/?g=lPGD
January 30, 2018
Nonfarm business productivity and real compensation, 2007-2023
(Indexed to 2007)
https://scholarworks.umass.edu/cgi/viewcontent.cgi?article=1348&context=econ_workingpaper
2023
Sellers’ Inflation, Profits and Conflict: Why can Large Firms Hike Prices in an Emergency?
By Isabella M. Weber and Evan Wasner
Abstract
The dominant view of inflation holds that it is macroeconomic in origin and must always be tackled with macroeconomic tightening. In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices. Such firms are price makers, but they only engage in price hikes if they expect their competitors to do the same. This requires an implicit agreement which can be coordinated by sector-wide cost shocks and supply bottlenecks. We review the longstanding literature on price-setting in concentrated markets and survey earnings calls and compile firm-level data to derive a three-stage heuristic of the inflationary process: (1) Rising prices in systemically significant upstream sectors due to commodity market dynamics or bottlenecks create windfall profits and provide an impulse for further price hikes. (2) To protect profit margins from rising costs, downstream sectors propagate, or in cases of temporary monopolies due to bottlenecks, amplify price pressures. (3) Labor responds by trying to fend off real wage declines in the conflict stage. We argue that such sellers’ inflation generates a general price rise which may be transitory, but can also lead to self-sustaining inflationary spirals under certain conditions. Policy should aim to contain price hikes at the impulse stage to prevent inflation from the onset.
https://fred.stlouisfed.org/graph/?g=PGTe
January 30, 2020
Labor Share of Nonfarm Business Income and Real After-Tax Corporate Profits, 2020-2023
(Indexed to 2020)
Decline in labor share of income:
98.7 – 100 = – 1.3%
Increase in real profits:
100.8 – 100 = 0.8%
https://fred.stlouisfed.org/graph/?g=EqSq
January 30, 2018
Labor Share of Nonfarm Business Income and Real After-Tax Corporate Profits, 2017-2023
(Indexed to 2017)
Increase in labor share of income:
101.5 – 100 = 1.5%
Increase in real profits:
104.2 – 100 = 4.2%
Professor Chinn,
“Figure 3: Cumulative increase in price of gross value added (black line), cumulative contribution of unit labor costs (blue bar), of non-labor unit costs (brown), and of profits (green), all relative to 2020Q1. NBER defined peak-to-trough recession dates shaded gray. Source: BEA 2023Q1 2nd release, Table 1.15, NBER, and author’s calculations.”
To compute the cumulative contribution price of gross value added, (black line) are you using log differences or some other method? For example, taking the log difference of “Price per unit of real gross value added of nonfinancial corporate business, 2023Q1 and 2020Q1 = log (1.318) – log (1.112) = 0.17. However, 0.17 looks a bit low compared to Figure3. Dividing 1.318/1.112 -1 = 0.185 which looks closer to Figure 3 value. Subtracting 1.112 from 1.318 = 0.206, which is higher than the value in Figure 3.
Similar issue question for remaining categories.
Being in the back row of the class, I may have to move outside the door next.
From Isabella Weber’s “Seller’s inflation” paper.
“Across these stages, inflation has thus far been driven by cost shocks which have primarily resulted in increased nominal profit flows. Labor, on the other hand, sees living standards decline as real wages fall with rising prices. Workers will thus eventually try to restore their living standards and reclaim lost real wages. This corresponds to the conflict stage in this inflationary process and is an expression of the distributional conflict inherent in inflation (Rowthorn 1977). However, workers are very much on the defensive in this stage, attempting to fight back and regain lost territory. Even if labor manages to restore its share in national income, the timeframe in which profit flows absorbed the increase in national income due to price hikes would have functioned as a temporary transfer of income from labor to capital.”
Weber goes on—-
“If the initial impulses which triggered propagation, amplification and conflict subside, it is possible for the propagation and amplification stage to run its course and for labor to just manage to restore its share in national income. This will have resulted in a ‘one-time’ broad-based increase in the price level. But even such ‘transitory’ bouts of inflation can last for significant amounts of time, create economic instability and cause a cost-of-living crisis. The potentially transitory nature of inflation does not mean that no policy response is required.” End of my lifting of Weber’s paper
Corporations jacking up of prices, for next to no reason, reminds me of W Bush’s Pre-emptive strike doctrine. Corporations think they have “the right” to increase prices only because they SUPPOSEDLY perceive prices will increase. They royally put the screws to American consumers, before the actual costs (true inflation) have hit, and then go “Oh sorry” “We know the media, and our lying TV and internet ads brainwashed you into thinking you needed to get product X now, so your tolerance of unnecessary price increases has risen” “So sorry”. That is NOT an efficient market clearing function and it is not an efficient allocation of resources or an efficient flow of American households’ capital. Period, full stop.
We will have a highway robbery of the American public EVERY TIME a real or propagated “emergency” or “shock” happens. Good luck getting people to go for that one, unless you want eventual violence.
Here’s one approach to dealing with the transfer of income from labor to capital:
https://www.bostonreview.net/articles/escape-from-the-market/
The reviewer points out criticism of basic income schemes on the grounds that a grant of basic income would be inflationary. This is very much like complaining that wage increases are inflationary. Here’s what the reviewer missed: a budget-neutral basic planning be constructed by taxing profits or wealth or carbon.
Andrew Yank has disappeared from headlines. I suspect conventional politicians tell themselves that Yang’s disappearance is a warning to avoid mentioning basic income.
Thanks for the link, really great and have already requested the book from my public library.
There were some things I found very appealing about Andrew Yang. I was actually very excited about Yang when he first announced his bid. When I started to dislike Yang, was not because of UBI. It was the way he sold it. It became “gimmicky” as a tool to get votes, and that bothered me, He ended up “feeding into” the negative stereotypes of UBI and thereby hurt people’s openness to UBI and willingness to do test runs on UBI.
Would I consider voting for Andrew Yang in future?? Yes, because he’s sharp, seemingly well-intended, he get the benefit of the doubt from me. I can even relate to him even more as a person for his social awkwardness during debates. But he has to present the UBI in a more mature and sophisticated fashion and not like he’s trying to sell me a “MyPillow” or a reverse mortgage. Let’s talk about incremental implementation of UBI, and initially targeted in a way which takes away incentives to commit street crimes and for people who need it. So the benefits can be tangibly observed. My personal belief is, in limited amounts, UBI could be beneficial to society.
“The picture shows that while corporate profits are not inconsequential to price level increase, they are actually smaller — in proportion — than labor costs.”
Yes, but while increased labor and input costs are expected with inflation, increased profits are simply corporate gouging. There’s no reason to justify higher profits with inflation. Higher corporate taxes would be in order.
“Higher corporate taxes would be in order.”
Moderna’s operating profits have been just over 60% of sales for 2021/2022. It seems its effective tax rate last year was a mere 12.7% in large part because of all those goodies for rich people in the 2017 Trump tax act.
Nividia has seen a huge increase in its stock price but it seems they are not paying any income taxes. Go figure!
I wonder what effect the composition of the labor force has on aggregate unit labor costs. Food service, accommodation, health care and the like are among the fastest growing and lower output/hour forms of employment. That could scew aggregate unit labor costs upward.
Marketing/advertising costs are non-labor costs, correct?? What’s to stop corporations from plowing revenues (that would have otherwise been profits) into advertising costs and then claiming “profits were a lower portion than labor costs (of price mark-ups)”?? People can laugh, but there’s been much weirder games played with balance sheets and income statements to game the system and game public appearances. The advertising can be used to falsely claim “input and labor costs are rising” and gets them cache with the media in cooperating in selling “labor costs and commodities inflation is eating us up”.
We saw similar such techniques back in 2007–2008 when CNBC and Financial Times refused to report on the dangers in the banking sector, when a large portion of their advertising revenues was coming from banks and broker dealers.
I’ve often wondered how much marketing is actually used to sell directly to consumers and how much of marketing is used to influence how industry in general and financial services are portrayed in the media. The advertising revenues influence media storylines greatly. Example: Anyone with a functioning brain knows Credit Unions offer higher rates on savings, and lower rates on loans/credit than commercial banks. How often do you see it mentioned on your TV news?? local or national?? Also I see advertisement of “fly-by-night” style credit unions that don’t belong to NCUA on my local TV. Do you think those local stations running those fly-by-night credit union ads ever mention in their consumer news reports that if the institutions aren’t NCUA their deposits aren’t insured?? NO, they do not. The non-NCUA member credit unions get how many more customers from the ad??–vs the real intention of the advertisement on local “KXYZ news”—-they don’t have to worry about “KXYZ news station” telling viewers not one red cent of their deposits are insured.
We do know Big Pharma pays more for selling and marketing than they pay for producing their products. And yet – they can still report high profits which end up offshore evading US income taxes.
Trump to be indicted soon?
https://www.msn.com/en-us/news/other/fasten-your-seat-belts-experts-on-trump-indictment-watch-as-jack-smith-grand-jury-reconvenes/ar-AA1c9oyC
Reports that the federal grand jury hearing evidence in special counsel Jack Smith’s investigation of former President Donald Trump’s handling of classified documents will reconvene this week sparked speculation that Trump may soon be indicted.
Further down in this story we see the Big Baby screaming nonsense about Jack Smith being a Marxist.
Is everyone involved with Crypto corrupt?
https://www.bbc.com/news/business-65814031
US charges crypto giant Binance with ‘web of deception’
Crypto giant Binance has been charged by US financial regulators with breaking the country’s investment laws.
The Securities and Exchange Commission accused the company of engaging in a “web of deception”, including erecting “sham controls” so that it could continue operating in the US. It comes as the US has pledged to use its laws to more aggressively oversee the crypto industry. Binance founder Changpeng Zhao said his firm had not seen the charges. He said the company, a trading platform which is used to buy and sell Bitcoin and other cryptocurrencies, would respond once it had seen the complaint and wrote on social media that his team was “standing by” to ensure that the platform’s systems remained stable. The lawsuit from the SEC follows an earlier complaint by another financial regulator, the Commodity Futures Trading Commission, which filed charges against Binance earlier this year.
Who to trust? Mark Zandi is hoping the FED not raise interest rates as he sees signs of a looming recession. Of course Lawrence Summers is scared that people might continue to see a strong labor market and is advising the FED to raise interest rates even more. Me? I’m with Zandi on this one.
Moderna generated an operating margin over the 2021/22 period just over 60%. No surprise as the cost of producing its vaccine was 21.3% of sales and its selling costs were only 4.5% of sales. Now it did incur more R&D expenses but those were only 14% of sales. But of course they paid a lot in income taxes – right? Well here is what their 10-K says:
‘Our effective tax rate for the year ended December 31, 2022 was 12.7% and was lower than the federal statutory tax rate, primarily due to the tax benefit of the foreign-derived intangible income deduction (FDII) and excess tax benefit related to stock-based compensation.’
Yep – that lovely 2017 tax cut for rich people was a real bonanza for Big Pharma! MAGA!
who bought all that vaccine at 60% margin?
Trump did – cause he is such a great businessman. He and his pals also bought stocks in a couple of snake oil Covid treatment companies – but they forgot that pump-and-dump means you have to sell before the marks figure out that they are marks.
The Oklahoma Governor (Kevin Stitt) gave permission to his cronies (who he installed as state purchasing agents) to purchase crap masks etc (or masks that never arrived as promised), in a kickback scheme during the Covid pandemic. Our local stations (KWTV9 and Griffin) PRETEND they don’t know Governor Stitt’s friends and cronies took kickbacks on Covid medical supplies. “The oklahoma standard”
https://www.readfrontier.org/stories/oklahoma-health-officials-cant-account-for-more-than-20-million-in-protective-equipment-spending/
Republican Governor Kevins Stitt, the same as Republican President Trump, was never punished for taking money for doing nothing to protect American during the respiratory disease pandemic. Hundreds of thousands of people died. While donald trump and his illiterate fans said~~”no one died”
Seems like I read somewhere that this number was going to be pretty important. Maybe someone here on the blog mentioned it?? I forgot now. But somebody seemed to think it would be an important number:
https://tradingeconomics.com/united-states/non-manufacturing-pmi
I guess I’m a little slow so I had to look up what this index represents:
https://www.investing.com/economic-calendar/ism-non-manufacturing-pmi-176
The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI) report on Business, a composite index is calculated as an indicator of the overall economic condition for the non-manufacturing sector. The NMI is a composite index based on the diffusion indexes for four of the indicators with equal weights: Business Activity (seasonally adjusted), New Orders (seasonally adjusted), Employment (seasonally adjusted) and Supplier Deliveries.
A reading above 50 percent indicates the non-manufacturing sector economy is generally expanding; below 50 percent indicates the non-manufacturing sector is generally contracting. The Non-Manufacturing ISM Report on Business is based on data compiled from monthly replies to questions asked of more than 370 purchasing and supply executives in over 62 different industries representing nine divisions from the Standard Industrial Classification (SIC) categories. Membership of the Business Survey Committee is diversified by SIC category and is based on each industry contribution to Gross Domestic Product (GDP). A higher than expected reading should be taken as positive/bullish for the USD, while a lower than expected reading should be taken as negative/bearish for the USD.
I also recall someone discussing this a while back but I forget who and when that was.
May services economy activity remains on growth track, reports ISM
The Services PMI—at 50.3 (a reading of 50 or higher signals growth)—fell 1.6% off of May’s 51.9 reading, growing, at a slower rate, for the fifth consecutive month. ISM said that the services sector has seen growth in 35 of the last 36 months, with December 2022 being the one month with a decline.
https://www.scmr.com/article/may_services_economy_activity_remains_on_growth_track_reports_ism
June services economy activity saw growth, according to the new edition of the Services ISM Report on Business, which was issued today by the Institute for Supply Management (ISM).
The Services PMI—at 50.3 (a reading of 50 or higher signals growth)—fell 1.6% off of May’s 51.9 reading, growing, at a slower rate, for the fifth consecutive month. ISM said that the services sector has seen growth in 35 of the last 36 months, with December 2022 being the one month with a decline.
The April Services PMI is 3.6% below the 12-month average of 53.9, with July 2022’s 56.4 and December 2022’s 49.2 marking the respective high and low readings for that period.
ISM reported that 11 of the services sectors it tracks saw gains in May, including: Accommodation & Food Services; Management of Companies & Support Services; Professional, Scientific & Technical Services; Utilities; Retail Trade; Arts, Entertainment & Recreation; Construction; Other Services; Transportation & Warehousing; Public Administration; and Educational Services. Services sectors with May declines included: Mining; Agriculture, Forestry, Fishing & Hunting; Real Estate, Rental & Leasing; Wholesale Trade; Information; Health Care & Social Assistance; and Finance & Insurance.
Why does Isabella Weber’s treatment by her Economics profession colleagues make me think of the Republican party’s recent treatment of Liz Cheney?? I must be having one of my jaded brain moments again…….. get my aspirin before the feeling goes out of my left arm.
Putin;s pet poodle a while back praised the Russia-led Collective Security Treaty Organization (CSTO) include Armenia, Kazakhstan, Belarus, Kyrgyzstan, and Tajikistan. I guess little Jonny boy did not realize this:
https://www.msn.com/en-us/news/world/a-member-of-putin-s-nato-equivalent-said-it-is-not-russia-s-ally-in-the-fight-against-ukraine-further-splintering-the-alliance/ar-AA1c8DwN?ocid=msedgdhp&pc=U531&cvid=e70d5764809b4ea08f3f360ad7cd72a6&ei=9
Armenia, a member of the CSTO, said it is “not Russia’s ally in the war with Ukraine.”
The CSTO is Russia’s equivalent of NATO, but members have snubbed Putin since its invasion of Ukraine.
Experts say the alliance is crumbling as Russia’s invasion exacerbated existing tensions.
A member of the alliance that is seen as Russia’s equivalent of NATO said it is “not Russia’s ally” when it comes to the war in Ukraine, in yet another fracturing of the group. “We are not Russia’s ally in the war with Ukraine. And our feeling from that war, from that conflict, is anxiety because it directly affects all our relationships,” Armenia’s Prime Minister Nikol Pashinyan said, according to Reuters’ translation of his comments, made to Czech news outlet CNN Prima News.
Pashinyan also said that Armenia felt trapped in the middle between Russia and the West, which is strongly backing Ukraine.
“In the West they notice that we are Russia’s ally … in Russia they see that we are not their ally in the Ukraine war, and it turns out that we are not anyone’s ally in this situation, which means that we are vulnerable,” Pashinyan added.
Trump lawyers ask DOJ not to indict during meeting: report
https://www.rawstory.com/donald-trump-indictment-2660955960/
Sources told the Post the lawyers aimed “to argue against any indictment of the former president over his handling of classified documents at his Mar-a-Lago resort.
Check out that sign behind these three mob boss attorneys. “No One is Above the Law” unless his name is Donald John Trump.
They are setting a legal precedent that future U.S. Presidents can do WHATEVER THE HELL THEY WANT and face zero consequences. And that’s where the real danger for this nation is going to sprout. It’s a roadmap for disaster. “Alexa, what’s the quickest route to nation-widel HELL??”
Trump is a thousand times worse than Nixon. And yet back in 1974 – we were able to get rid of Nixon. Now he did skirt criminal responsibility ala Gerald Ford.
@ pgl
Did you ever see somebody like Steve Elster come up with a terrific idea/tact and then look up towards the sky cursing, saying “Why didn’t I think of doing that!!!!!!!”
https://brooklynworks.brooklaw.edu/cgi/viewcontent.cgi?article=2344&context=blr
Thanks for this article. I have been wondering about this Trump Too Small lawsuit ever since the news told us about the case before the Supreme Court. I need to go out and buy a T-shirt with this on it!
https://trumptoosmall.com/products/trump-too-small-t-shirt
T-Shirt
Regular price$39.99 USD
Check this T-shirt out as it is well worth $40!
Hey Menzie, you know I am a weirdo and an Economics blogophile. And I like to give you suggestions for the blog every once in awhile that you didn’t ask for, or need, or probably want. But that’s what makes me such a lovable freakazoid, aye?? I noticed Diane Lim (aside from I assume family stuff) doesn’t look so busy lately.
https://economistmom.com/about-diane/
Wouldn’t she make a great co-host of this blog and a welcome “female voice” on the blog?? I thought it’s a pretty damned good idea if I do say so myself and feel she would be a solid intellectual figure for the blog, again a female perspective, and enliven the blog. Just an idea (I like the blog “as is” but a sprinkle of change, when done for the betterment, is a good thing I think)
I’d ask for Mike Konczal (Roosevelt) and James Kwak (writing another book), but it appears “they already have a gig”.
Moses Herzog: I have lots of respect for Dr. Lim. I served with her on the Clinton CEA in 2000. However, we are not in the process of adding new people to the group (actually, I would say Jim is not- it’s his blog, I am a contributor).
@ Menzie
That answer/reply is fair and complete, and greatly appreciated (Oh damn I’m trying to be nice now, I “gave it away”~~ you know I’m having drinks. Seriously, I appreciate it. Can you humor this old/sad/pathetic white guy and “keep it in the back of your mind”?? or “keep it on the backburner”?? I think Prof Hamilton is reading now and can “mull it over” in his mind. “Continuity” was important for the LA Lakers NBA championships. “Continuity” was important for the NBA Champion Boston Celtics. “Continuity” was important for Wooden’s UCLA Bruins. Knight’s Hoosiers….. etc “Continuity” was important for NAVY football!!!! We can trust Prof Hamilton is reading this, and will make the right move for a blog….he surely must have some small love for??? Or other women choices for co-host are also great.
Thoughts from “the pistachio and beer gallery” are just grateful to be listened to./
: )
hey john. putin and russia just blew up a major damn that will result in the deaths of hundreds of innocent civilians. will impact the operation of a major nuclear facility. your support of putin and his behavior is simply heinous.
ltr. let’s see you come out with a statement condemning the terrorist action taken by russia against ukraine. if you remain silent, it implies you condone this abominable behavior.
the both of you think the evil behavior conducted by russia against ukraine is simply a joke, to be manipulated for your own political gains. neither of you has an ethical bone in your body. it is all about winning your political battles. Irregardless of the loss of innocent lives along the way. neither of you have ANY regard for the suffering encountered by the people of ukraine. simply evil and callous individuals.
Just speculating here –
Ukrainian forces are reportedly beginning their counter-offensive. Russia has just created a buffer between some Ukrainian territory occupied by Ukrainian and Russian forces. That allows Russian forces to redeploy other front line areas. Ukrainian forces will redeploy, but not on a planned basis. At the same time, Ukraine has more homeless, more internally displaced people, more economic disruption.
So in all, Russia has committed another war crime – what’s new? – while giving itself an advantage against Ukraine’s counter-offensive.
Will South Africa, China, India or Iran rethink their positions regarding Russia invasion of Ukraine, merely because Russia has committed another war crime? Rape, murder and kidnapping didn’t seem to do the trick, not to mention the invasion itself, so why should blowing up a dam?
Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
the temporary (weeks or months) separation of the dneipro line of contact allows both sides to redeploy.
Did I read somewhere that this flood ended up drowning some of the Russian troops. The Putin war crime machine is killing his own troops.
1) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
2) ltr. let’s see you come out with a statement condemning
1) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
2) ltr. let’s see you come out with a statement condemning
1) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
2) ltr. let’s see you come out with a statement condemning
[ Notice the madness of racism.
I have no idea what is being discussed and never have commented on nor ever would comment on any such matter, but the prejudice is so blinding that I must be viciously bullied. This is what the craziness of racial prejudice amounts to. ]
Your what-about-ism in no way is evidence of someone else’s alleged racism. ltr – hate to tell you but you just took the bait and have come off as pathetic.
1) ltr. let’s see you come out with a statement condemning
2) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
[ This is definitive racism. A blood libel is created and repeated about what I know nothing whatsoever about. ]
exactly wha was stated that was racist, ltr. your game bores me. I said absolutely nothing racist, ltr. stop such baseless accusation.
and let me point out, you seem to be selectively knowledgeable about items. very esoteric issues from decades ago, you quote. but a major European war with dramatic war crimes, and you selectively present you know nothing about the events? hogwash. you are a coward who resorts to crying racism anytime somebody challenges you on an issue.
is suppose you also know nothing about the uighyers persecuted by the ccp in china?
the more vociferously you claim racism, the more I know you are bothered by the truth, ltr.
1) ltr. let’s see you come out with a statement condemning
2) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
[ This is the way in which blood libels were created against the Jews of Europe before they were expelled from Spain and Portugal and England and persecuted by the Inquisition. ]
cup bono applies to either RF or Kiev.
last autumn kiev damaged the dam in what they termed an experiment
the breech could be effects of earlier damage.
too early to blame
Nah. Even in the fog of war, this is clear enough. Russia has been attacking Ukraine’s power grid for months, and the dam is part of the grid. Russia has been accused of war crimes by the International Criminal Court and this is another war crime. The dam is in Ukraine, creating water supply and electricity in Ukraine, not Russia. Russia has put a Ukrainian nuclear plant at risk, so has form for this kind of crime.
Russia invaded Ukraine, not the other way around.
rf held the dam in question.
why would they blow a flood gate; when they could open them all?
what do questions about the origins of the state of ukraine have to do with the damage to a dam?
you think it is just coincidence the dam broke now, when the Russians are about to get their a$$ handed to them? suuuuuure. you are about as logical as Johnh accusing the usa of sabotaging the nordstream pipelines. he had “evidence” as well. propaganda from putin supporters.
Trump lawyers visit Justice Department
https://www.politico.com/news/2023/06/05/trump-lawyers-visit-justice-department-00100199
CBS observed the attorneys, including James Trusty and Lindsey Halligan, entering DOJ’s offices late Monday morning. The subject of their visit was not immediately clear, nor was the identity of the officials they were slated to meet. The Justice Department referred questions on the matter to a spokesman for Smith, who declined to comment.
To have been a fly on the wall. My understanding is that Trusty and Halligan tried to suggest one of Jack Smith’s prosecutors had acted unethically and Smith shut down this pathetic accusation.
Maybe we should start a betting pool on how soon indictments will come down and how many there will be.
I get things have gotten quite weird in Texas but a teacher is reprimanded for telling her students about their Constitutional Rights?
https://www.intheknow.com/post/third-grade-teacher-in-austin-texas-gets-reprimanded-for-teaching-students-about-their-legal-and-constitutional-rights-im-concerned-that-they-find-that-concerning/
https://www.bloomberg.com/news/articles/2023-06-06/coinbase-sued-by-sec-for-breaking-us-securities-rules
US Crypto Crackdown Reaches Fever Pitch as SEC Sues Coinbase
SEC sued Coinbase alleging securities rules violations Tuesday
Regulator brought sweeping case against Binance on Monday
The Securities and Exchange Commission widened its sweeping crackdown on crypto by accusing Coinbase Global Inc. of running an illegal exchange, a move that could make it harder for the industry to operate and for US citizens to trade.
In a 101-page lawsuit filed Tuesday in federal court in New York, the SEC alleged that Coinbase for years evaded its rules by letting users trade numerous crypto tokens that were actually unregistered securities. Just a day earlier, the regulator sued rival Binance Holdings Ltd. alleging a slew of violations.
Governor DeSantis being charged with kidnapping by the State of California:
https://www.sandiegouniontribune.com/news/california/story/2023-06-05/newsom-desantis-migrant-flights-kidnapping-charges
Gov. Gavin Newsom took his feud with Gov. Ron DeSantis to new heights on Monday, seemingly threatening him with kidnapping charges after California officials say South American migrants were sent to Sacramento by the state of Florida as a political stunt. Newsom, a Democrat, cited state kidnapping laws in a tweet to the Florida governor and Republican presidential hopeful, whom he called a “small, pathetic man.”
DeSantis indeed is a small pathetic person. He is also a racist POS and a criminal. I’m surprised that New York has not charged this POS with kidnapping.,
Sea temperatures are at a massive record high
Kevin Drum
June 6, 2023 – 9:32 am
https://jabberwocking.com/sea-temperatures-are-at-a-massive-record-high/
Yep – this headline is going to get little CoRev all angry and barking. But read the post as Kevin brings the evidence!
Bwa, ha ha, the desperation of the latest claims are an amazement. After a short period of surface temperature cooling primarily due to consecutive la Ninas, and now after the apparent start of an el Nino the attention focuses on sea surface temperatures. What was it you expected to happen? Levitate?
A few thread back Baffled pointed out that the stratosphere was cooling. As it has for decades.
For you climate cultists here’s a hint. The oceans actually TRAPS heat much better and much, much much longer than Green house Gases. Another hint is the Sun’s short wave radiation is the primary source for heating those efficient storing oceans.
Does anyone still remember that UN definition claiming mankind burning fossil fuels was the primary cause of climate Change (meaning surface temperature WARMING)? Over 70% of this planet’s surface is water covered.
This is what NOAA says about 70+% of the planet’s Surface Temperatures:
“Sea surface temperatures have a large influence on climate and weather. For example, every 3 to 7 years a wide swath of the Pacific Ocean along the equator warms by 2 to 3 degrees Celsius. This warming is a hallmark of the climate pattern El Niño, which changes rainfall patterns around the globe, causing heavy rainfall in the southern United States and severe drought in Australia, Indonesia, and southern Asia….” Where’s that man made cause?
Desperation is an amazement of the liberal mind.
some research on deep trench heating is questioning the climate rationale
“Some research”? “Some research” suggests ingesting bleach prevents Covid. “Some research” finds that smoking cigarettes provides health benefits. “Some research” indicates that the liver is the seat of emotion.
Why don’t you show this research on ocean trenches? Love to see it. Or if you suddenly can’t locate it, why don’t you at least tell us what the gist of it was? Or what you mean by “rationale”?
here is the guy i follow.
https://twitter.com/EthicalSkeptic/status/1664657442225963009
you should read some of his other stuff and go to his site and get up on critical thinking
another random weird thought from the guy who gives random weird thoughts here
I know this is like one of those things that wouldn’t bother anyone else. We live relatively near a US Air Force Base. It’s not entirely uncommon to see military aircraft near our home. One time (remember this is a suburban area) we had what I am near certain was either an F-16 or an F-22 Raptor, “buzz” our car very low to the ground near our downtown post office. That takes some balls for a jet pilot to do in a suburban area. The sound honest to God was like he had ‘the afterburners” on. I have discussed seeing B-52 bombers flying low near my home (I suspect on test flights after “refittings” for problem solving) within a 1/2 mile radius. Helicopters etc. Now here is my question. There were public news stories that the AWACS planes were being shutdown, and “mothballed” out in Arizona (I think Arizona??) But since it was announced they were shutting down the AWACS (they are distinctive with the rotating large disc on top), I have seen 3 AWACS (in separate moments) fly over my head. Is that not strange for a program that was shutdown and being mothballed??
Signed, Curious and easily dumbfounded Uncle Moses.
over memorial weekend I enjoyed the show put on by USAf thunderbirds, f-16s
seen them for years always amazed!
I’ve already lost some hearing to jet noise working near USAf flight lines
The last AWACS plane I saw, (yesterday late afternoon) the plane was LOW and going northeast~~~Arizona is west of the city I live.
Going out of service may not mean mothballing the entire fleet. Some may go into private or research use. Dunno. Also maybe being mothballed eslewhere?
half the e-3 awacs fleet, modified b707 will be retired in the next year or two.
that leaves around 20 USAf e-3 operating
while nato owns a fleet of e-3 which may or may not see some retirement.
a couple of model Russia Sam can see awacs first……
I have looked at Table 1.15
Here are some conclusions:
The relative share of labor in the per unit of real gross value added soared in the early stages of the pandemic, only to fall back below normal during 2022. In Q1 2023, labor’s share of per unit of real gross value stood at 59.0%, compared to 59.1% for the years 2016-2019. Labor has caught up.
Unit non-labor costs remain below normal, standing at 26.3% of per unit of real gross value compared to 28.1% for 2016-2019. This discrepancy is explained by ‘taxes on production and imports less subsidies plus business current transfer payments (net)’ (whatever that is), 8.7% v 9.5% for the 16-19 avg.
Importantly, net interest and miscellaneous payments stand at 1.7% v an average of 3.1%. This suggests that businesses are enjoying the flip side of the banks’ predicament. The banks lent at 3% and have to pay 5%; businesses borrowed at 3% and can raise their prices with inflation.
Thus, higher than normal profits, 11.9% v the average of 10.6% are essentially explained by the interest rate environment and taxes and subsidies (whatever that means). In strictly mathematical terms, lower than normal interest payments as a share of revenues explains all of corporates excess profits, at least per Table 1.15
Gee Stevie – your BFF JohnH is going to be disappointed at what you wrote there. Of course the rest of us saying “thank you Captain Obvious”!
“In Q1 2023, labor’s share of per unit of real gross value stood at 59.0%, compared to 59.1% for the years 2016-2019. Labor has caught up.”
Has labor really caught up? The usual measure economists used to rely on has been:
Share of Labour Compensation in GDP at Current National Prices for United States
https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
I decided to see the latest on the measure put forth by Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), “The Next Generation of the Penn World Table” American Economic Review
Alas the last reporting of this series was 2019 and so much has changed over the next 3 plus years. Old timers like me used to remember when this measure stood over 64% so that it had been even preCOVID less than 60% is disappointing.
Maybe someone who really gets this stuff can update this series as I suspect labor share ain’t doing all that great in 2023 as compared to the good old days.
@ pgl
whatever our disagreements, Me here finishing my bottle pgl, I wanna tell you….. I respect you for hunting those links. “going down that rabbit hole” “H” (our personal joke) You have my respect. “H”
You do know you can now insult my mother/father….. only “WQ” is “off limits”…… I won’t give your real name away. That is my personal word to you pgl
I am speaking of the topic of this post, which is entitled ” Inflation: A Decomposition to Profits, Unit Costs”. We are therefore speaking of the interpretation of Table 1.15, which Menzie is using for this post. When I speak of ‘caught up’, I am referring to the four-year average prior to the pandemic, that is, per Table 1.15, labor’s share has regained its average for the four years prior to the pandemic.
If you have deeper insight into this table and can tell me what the ‘right’ percentage is for labor’s share of per unit of real gross value, I’m all ears.
I guess you will abuse any measure even when a more appropriate measure conflicts with your usual BS. Try reading what Floxo provided and for once in your pathetic little life – LEARN something.
Just a reminder: the FRBSF recently offered a look at various contributions to inflation, usig other methods:
https://www.frbsf.org/economic-research/publications/economic-letter/2023/may/how-much-do-labor-costs-drive-inflation/
Recession Watch –
Goldman has lowered its odds of recession this year to 25% from a prior 35%, based on the achievement of a debt-ceiling deal and on strong job growth:
https://www.marketwatch.com/story/the-u-s-isnt-in-recession-and-it-may-not-be-headed-for-one-47e27552
The first sentence is dumb:
“A much-predicted U.S. recession still hasn’t happened — and some economists are questioning whether it will happen at all.”
We’ll know in a year or so whether a recession is declared for this year. Jeffry Bartash isn’t one of our better economic journalists, and the poor understanding of how one knows if a recession has begun is par for the course.
Still, financial sector forecasters do seem to be mostly marchinto the same drummer right now, reducing recession odds all ’round. Fingers crossed they’re right. Data trends strike me as quite mixed these days.
https://www.worldbank.org/en/news/press-release/2023/06/06/global-economy-on-precarious-footing-amid-high-interest-rates?intcid=ecr_hp_headerL_en_ext
Global Economy on Precarious Footing Amid High Interest Rates
Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
[ I have no idea what is being discussed and never have nor ever would comment on such a matter, but the prejudice is so blinding that I must be viciously bullied. This is what the craziness of racial prejudice amounts to. ]
ltr. let’s see you come out with a statement condemning
ltr. let’s see you come out with a statement condemning
ltr. let’s see you come out with a statement condemning
[ I have no idea what is being discussed and never have commented on nor ever would comment on such a matter, but the prejudice is so blinding that I must be viciously bullied. This is what the craziness of racial prejudice amounts to. ]
I was wondering why little Jonny boy has not responded to this post. Well he is too busy under other posts chirping how he has been right all along when he said that 2022 Pepsi margin (13.3%) was higher than its 2020 margin (14.3%). How does this lying clown justify such a mistake? He is quoting the CFO who is hoping if not forecasting a strong 2023 margin. Yes Jonny boy does not know the difference between a forecast V. historical financials.
We all know Jonny boy is dumb – but DAMN!
I just noticed two things: (1) even though it has been a week since Jeff Frankel’s informative post, CoRev is still spreading his Koch Borther lies; and (2) JohnH is still touting his dishonest and stupid claims over the profit margins of Pepsi.
Like really – it’s sort of like Trump still claiming he won the 2020 elections!
Not much to see in the above graph. A procyclical profit share as evidenced by a countercyclical labor share has been a feature of the US economy for a very long time, see here for a discussion:
https://www.bls.gov/opub/mlr/2017/article/estimating-the-us-labor-share.htm
Or here for latest data:
https://fred.stlouisfed.org/series/PRS85006173
Moreover, this is also consistent with the New Keynesian Phillips Curve (NKPC) based on Calvo (or variant) pricing models as explained by Menzie in a prior post. The FED bases its decisions, in part, on its own version of the NKPC to model inflation. The modern view is that inflation, if controlled, is not that economically damaging. So the idea is to reduce it slowly and try to avoid a recession. The corporate greed model of inflation (“greedflation”) is a media contrivance – not economic theory.
There are real issues associated with a long term rise in the profitability of multinational corporations, increasing wealth inequality and wage stagnation in the developed economies. But these are largely separate from the current inflation.
Nonfarm Business Sector: Labor Share for All Workers
Interesting graph that shows that Princeton Steve’s claim that labor has caught up is not true.
The BLS discussion of labor share may be from 2017 but is perhaps the best discussion of this important issue I have seen. Thanks as it is a must read for anyone who actually wants to discuss these issues among the adults.
“The corporate greed model of inflation (“greedflation”) is a media contrivance – not economic theory.”
This is certainly true as far as those pathetic links JohnH loves to dig up.
‘There are real issues associated with a long term rise in the profitability of multinational corporations, increasing wealth inequality and wage stagnation in the developed economies. But these are largely separate from the current inflation.’
What I have argued for a long long time. Thanks for an incredibly informative comment!
ARTICLE
FEBRUARY 2017
Estimating the U.S. labor share
The labor share—the fraction of economic output that accrues to workers as compensation in exchange for their labor—was thought by some early-to-mid-20th-century economists to be relatively stable. Yet its decline during the second half of the 20th century and on into the early years of the 21st century has shown otherwise, attracting the interest of many researchers.
Indeed a lot of economists have noticed this unfortunate decline which has made us review much of what we thought 40 years. The rise in market power, the role of intangible assets, etc. have been widely discussed even among “mainstream” economists. That JohnH pretends he is the only one who have noticed or even cared only shows how little Jonny boy has bothered to read actual economics.
https://fred.stlouisfed.org/series/LABSHPUSA156NRUG
Share of Labour Compensation in GDP at Current National Prices for United States
I know I’m repeating myself but notice that some 50 years ago, we could say the labor share was near 65%. Now it is around 60% at best. This fact has been noticed by mainstream economists with all sorts of discussions on why the labor share has declined. Anyone who wants to deny this probably should not be posting stupid comments on an economist blog.
“The corporate greed model of inflation (“greedflation”) is a media contrivance – not economic theory.”
I have to disagree based on two related points. One is that corporate greed – profit maximization – is foundational to modern economic theory. Thank Milton Friedman. The other is that this cycle is an outlier and so might need more than “it always happens like this” as an explanation.
Here’s profit as a share of GDP:
https://fred.stlouisfed.org/graph/?g=15VKL
Profits rose immediately as recovery from the Covid recession began to the highest share of GDP since before the Great Depression.
Slightly different arrangement, same result:
https://fred.stlouisfed.org/graph/?g=15VLh
Strip away the cutesy “greedflation ” label and you can find a fair number of economists looking into corporate profits as a source of inflation. The results seem to suggest that corporate profit maximization has always been a source of inflation during expansions, as you suggest. So rather than “not much to see”, profit as a source of inflation is a notable regularity.
Profits as a source of inflation is also a phenomenon which can be limited through government action, including taxes and anti-trust policy.
A bit of good news about the cyclical pattern of profits – there is evidence that surging profits tend to last only about a year at the beginning of expansions, and then fade, and that this expansion is no exception:
https://www.kansascityfed.org/research/economic-bulletin/corporate-profits-contributed-a-lot-to-inflation-in-2021-but-little-in-2022/
“you can find a fair number of economists looking into corporate profits as a source of inflation”
That is true even if Jonny boy denies it. But Floxo was referring to that rather dumb news story that Jonny boy thinks is brilliant research.
“Corporate profits rose quickly in 2021 along with inflation, raising concerns about corporations driving up prices to increase profits. Although corporate profits indeed contributed to inflation in 2021, their contribution fell in 2022. This pattern is not unusual: in previous economic recoveries, corporate profits were the main contributor to inflation in the first year and displaced by costs in the second year.”
Totally consistent with what Dr. Chinn has been saying. Inconsistent with those emotional rants from JohnH.
Former Trump aide, MAGA Inc founder Taylor Budowich, goes before grand jury in classified docs probe
https://abcnews.go.com/Politics/former-trump-aide-maga-founder-taylor-budowich-grand/story?id=99878731
The founder of MAGA Inc and a former Trump aide, Taylor Budowich, is appearing in front of a South Florida grand jury on Wednesday, which is hearing evidence and witness testimony in the classified documents probe.
An ABC News camera caught Budowich going into the federal court in Miami. He did not respond to questions or a request for comment. His lawyer also didn’t respond to ABC News’ request for comment.
Budowich responded with a Tweet Wednesday, saying this is all an attempt to go after former President Donald Trump.
“Today, in what can only be described as a bogus and deeply troubling effort to use the power of government to ‘get’ Trump, I fulfilled a legal obligation to testify in front a federal grand jury and I answered every question honestly,” Budowich tweeted. “America has become a sick and broken nation—a decline led by Joe Biden and power hungry Democrats. I will not be intimidated by this weaponization of government. For me, the need to unite our nation and make America great again has never been more clear than it is today. “That starts with re-electing President Donald J. Trump, a purpose I will not be deterred from pursuing,” he continued. This comes as ABC News has previously reported that Special Counsel Jack Smith has expanded his probe into political action committees that were formed by Trump allies.
Oh what I would give to hear this clown testify before a grand jury convened by Jack Smith.
“1) Oh, and get ready for what-about-ism from Johnny, ltr and one of the anonymouses.
2) ltr. let’s see you come out with a statement condemning
[ Notice the madness of racism.”
LTR, i am going to demand ONCE AGAIN that you apologize for throwing out racist accusations. your knee-jerk reaction is always to claim racism, and try to sell yourself as the equivalent of jews persecuted during wwII. you are alive and living in a free nation, and yet you feel like a jew persecuted during the great war? you do know that many jews were exterminated in gas chambers because of their culture and heritage? exactly how does your free life in america correlate with the fate of those jewish communities? how would i be treated in china? it is embarrassing how you abuse the idea of racism to defend your position (or lack thereof) of the Ukrainians under assault from russia, or the uighyers under persecution from the ccp.