MARY LOUISE KELLY, HOST:
The most recent inflation numbers released were higher than expected. We have heard a lot of reasons for why inflation remains so stubbornly high, including the supply chain, the pandemic, war in Ukraine. Well, some Democrats, among them President Biden, point to one more factor as a contributor, record corporate profits. Here's the president speaking earlier this year.
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PRESIDENT JOE BIDEN: While families struggle to pay their bills, some corporate executives are on earnings calls with investors on Wall Street cheering their record profits and explain how they're using this period of inflation to cover the rise in prices far beyond what they need to do to cover their costs.
KELLY: Well, this got us wanting to take a closer look at corporate profits. So to do that, I am joined by Lindsay Owens. She is executive director of the Groundwork Collaborative, a group that, among other things, tracks corporate earnings. Lindsay Owens, welcome to ALL THINGS CONSIDERED.
LINDSAY OWENS: Thanks so much for having me.
KELLY: So I gather your group, the Groundwork Collaborative, joins these calls that we just heard President Biden mention there, calls that companies hold with their investors. What have you been hearing recently as you listen in?
OWENS: Yeah, so we listen in on these calls, and we also read through the transcripts, which are publicly available to anyone who wants to look them up. And what we hear over and over again is CEOs talking about the fact that they're able to raise prices beyond the level that they need to cover their rising input costs.
KELLY: Give me an example or two of companies that are raising their their prices and making unusually high profits right now.
OWENS: Yeah, we're seeing it really quite widely. H.B. Fuller, a large adhesive company - you know, the CEO recently told an analyst that he's getting a little bit of savings as some of these costs in the economy are declining. But he's not passing any of that back along to the consumer. So he says, we don't reduce prices.
KELLY: Help me understand what's going on here because the companies you're talking about - these are for-profit companies. And for-profit companies, as the name suggests, are trying to make a profit. They are generally allowed to do so in a free market. What makes this moment unusual, do you think?
OWENS: What we're seeing right now, though, is companies really exploiting this moment of crisis. And they're really taking advantage of this moment to go higher than they need to on markups and on profits. And I think there's just a really important question we should be asking. You know, 38 states currently have price gouging laws on the books. Those laws say things like, you know, you can't sell bottled water for a hundred dollars a gallon after a hurricane. And I think this moment, this really unprecedented moment in our economy begs the question of whether it's time for maybe a federal price gouging statute to prevent against some of this egregious profiteering during moments of real economic hardship and crisis.
KELLY: Although isn't the market supposed to correct for this? Isn't the market supposed to handle this? If a company prices things too high, their customers will go elsewhere to buy things. And that company's competitors win out.
OWENS: Yes, absolutely. In theory, this type of profiteering wouldn't really be possible, right? A competitor would come in, undercut one of the big players and drive prices down. But what we're seeing in this moment is that the companies with the biggest market share, with the most market power, the most pricing power are the ones who are really engaging in the most egregious profiteering.
KELLY: Lindsay Owens - she's executive director of the Groundwork Collaborative. Thank you.
OWENS: Thanks for having me. Transcript provided by NPR, Copyright NPR.
