Higher input costs did not squeeze profits. In fact, profits have lately reached their highest share of national income so far in the 21st century. This rise in profits adds to inflation, of course. About 3/4 of the increase in profits went out as dividend payments.
The ability of firms, especially those serving consumers more or less directly, to increase profits in the face of higher costs is symptomatic of business concentration – which is to say, of monopoly rents. Retailers, construction and wholesale firms reported the greatest increase in profits, followed by goods producers and healthcare.
So by all means, let’s shield U.S. corporations from overseas competition, and kill off as many small domestic firms as possible in the process. And please let’s keep Lina Khan away from the Federal Trade Commission.
The last time a supply shock increased unit costs, there was a perverse response in the distribution of national income – profits’ share rose:
https://www.stlouisfed.org/on-the-economy/2025/apr/whats-driving-surge-us-corporate-profits
Higher input costs did not squeeze profits. In fact, profits have lately reached their highest share of national income so far in the 21st century. This rise in profits adds to inflation, of course. About 3/4 of the increase in profits went out as dividend payments.
The ability of firms, especially those serving consumers more or less directly, to increase profits in the face of higher costs is symptomatic of business concentration – which is to say, of monopoly rents. Retailers, construction and wholesale firms reported the greatest increase in profits, followed by goods producers and healthcare.
So by all means, let’s shield U.S. corporations from overseas competition, and kill off as many small domestic firms as possible in the process. And please let’s keep Lina Khan away from the Federal Trade Commission.