Inflation or price gouging

[woodchucker]

I'm tired of these price increases. I think all of us are. My wife in a previous life used to analyze companies for a bunch of private investors. She watches the finance programs during the day (or at least listens while doing things)... A few weeks ago I was talking about some items we can't afford anymore because it's ridiculous, and availability. I can't get a new heat exchanger for my pool...
Anyway she tells me that many companies just reported record profits.. and we are not talking small increases, we are talking mega profits.
So is the inflation real, or are companies gouging us? I vote for gouging , taking advantage of the American's so that the CEO's can get fatter and richer. I bet most of them retire after getting their big F***** bonuses.

Anyway an example of this nonsense. I want to get a few more shelves, mostly for my son's basement. Back in 2017 I bought these shelves for $28 from Amazon. I liked them because there are a lot of shelves so you can organize stuff. He needs organization.
Well no longer avail. The closest shelving system is $130 + ... the light duty steel shelves are a thing of the past... now it's all $$$$$$ shelving.

I'm ANGRY.. I can't stand these piggy CEO's... I have no use for people who soak the profits. Just because you can doesn't mean you should. Remember Microsoft got rich/big by offering software at a reasonable price (mostly)... They sold lots of them. Most today want to get rich by selling as few for as much as possible. Remember that turd that took over insulin and priced it so people couldn't afford it...

 

[Cadillac]

I agree a lot of it is gouging. But my little go to Mexican restaurant raised their prices accordingly with the outrageous meat prices we all have now. It’s not their fault they still have to make money too.
I have another crazy inflation example. I work in the golf industry. The Golf industry did great these last two years. People golfed since it was something outside exercise and unrestricted.
Major equipment suppliers are John Deere, toro and Jacobsen. Last year they told us it was gonna get crazy with back orders and if we wanted equipment to order now. We ordered 400k in equipment will get by spring great. So 1piece of equipment cost us 32k last year. Today that same piece of equipment would cost 50k with no changes. That’s f-ing crazy. The reasoning I don’t have a answer. My guess is greed and reworking their supply chains.

 

[Ischgl99]

I think it’s a combination of both. Materials and labor costs have significantly increased the last couple years, but I also believe a lot of companies are using the inflation excuse to raise prices more than they normally would be able to. The record sales numbers being reported is with inflated prices, so part of that increase is the big increase in inflation, people have not increased their purchases that much. Unless wages catch up quickly, purchases will need to slow down. One of the financial shows I watch have a saying “the cure for high prices, is high prices.”

I bought my PM-1236T lathe in November 2020, I think I paid $4,800 for it or there abouts. It’s listed at $6,800 now. The drastic increase in shipping from Taiwan is responsible for a large portion of that, and I am sure the machine from the supplier went up a lot too since steel prices are up significantly from two years ago.

 

[Beckerkumm]

I'm in the accounting business and for years I've watched margins tighten as input costs rose but pricing didn't keep up due to competition, including foreign and domestic. I'm not surprised that companies are taking advantage of the opportunity to expand or return margins to previous levels while they can. Miss this opportunity now and try to increase prices when the inevitable recession hits due to the Federal Reserve raising rates and no longer buying all the government paper? Good luck.

Always easy to blame others but we have all gotten greedy and we all share some blame. Dave

 

[Aaron_W]

I recently saw a discussion of this. Big companies are showing record profits since 2020. Increased prices to cover costs would not equal increased profits so clearly some are taking advantage of the current situation. There is little competition among huge corporations anymore.

This popular illustration shows how few tool companies exist today. The tool market is actually rather competitive compared to some. Only a handful of companies dominate the food and fuel markets.





Smaller businesses are in a tight spot, they have little control over their costs and have to pass on higher costs to remain profitable.

 

[FOMOGO]

We need another Teddy Roosevelt, someone who will break up the big corporations, increase competition and reign in inflation. The problem with that, the majority of congress is bought and paid for by those same corporations. Thanks to that, and SCOTUS declaring that corporations have the same rights as indivduals, I don't see anyway to turn this train around. Mike

 

[woodchucker]

I'm in the accounting business and for years I've watched margins tighten as input costs rose but pricing didn't keep up due to competition, including foreign and domestic. I'm not surprised that companies are taking advantage of the opportunity to expand or return margins to previous levels while they can. Miss this opportunity now and try to increase prices when the inevitable recession hits due to the Federal Reserve raising rates and no longer buying all the government paper? Good luck.

Always easy to blame others but we have all gotten greedy and we all share some blame. Dave

Oh, I disagree Dave, maybe if we lose the CEO's big pay and many of the execs. They have been making way more than the people under them. 50 years ago, it was 1:10 (actual stat) employee wage to ceo wage. Now its 1:10000 maybe (I don't have the stat that's out of my Arse)... Most companies have cut quality to make more. They have done it to themselves. When they do that, why pay big bucks for their product when I can buy a offshore piece of junk (same quality) for less.

I think I am very surprised when I find a good product these days... no matter where it comes from. Someone always comes up with an area they can skimp on...

 

[Barncat]

Another example of greed:
The grocery store I frequent is a large chain. Last fall while looking at bags of apples (3lb) there was an employee there with a tablet. He saw me picking up the honey crisp and then looking at the price and then putting them back. He asked if that was too expensive. I replied yes, at $12 a bag, that’s $3 more a bag than a couple weeks ago. He smiled and said it is his job to increase prices and see what people will pay. He said he had them up to $18 a bag last week, but sales suffered, so he took them pack to the point were his data showed them selling the most for a very profitable price. It was his job to increase all fruit and vegetable prices and see where the intersection of high prices and high sales meet. It really disgusted me.

 

[mmcmdl]

Hm...........................all these high profits are killing the stock market this year . I think I'm down 15% for the year . That's $6 I'll probably never see again .

 

[Beckerkumm]

To not get too far down the rabbit hole, I don't disagree that CEO pay is screwed up. Even Warren Buffett agrees with that. Different issue from inflation or corporate profits. Those problems would exist if CEO pay was capped. Other types of corruption would replace it. See congress, Mexico, etc for how people work around income limits.

As to the quality issue, I again blame us for consumer greed as much as I blame those producing the inferior goods. What % of us buying metalworking machines asks about bearing quality, oil distribution design, type or grade of cast iron, motor quality, on and on. Do we require documentation for runout, turning precision, machining accuracy? We accept a million brands of basically the same machine design, 12x36, 14x40, etc and then read marketing literature to decide among the mediocre, often settling on price. How many of us would accept a 5K or 10 K increase or educate ourselves to understand if it was appropriate? ( Or just buy used and rebuild ? )

We can only change our own behavior. Dave