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> Why would you not expect nominal profits to be at all time highs if the purchasing power of the currency goes down? Purchasing power doesn't magically decrea
by adamsmith143 4y ago
> Why would you not expect nominal profits to be at all time highs if the purchasing power of the currency goes down?
Purchasing power doesn't magically decrease, it's a function of increasing prices.
Think about for a little. If a companies input costs have increased by 10% their profit will decrease right, maybe not by 10% but it will decrease. So if they increase their prices they can get back to their previous profit level. Instead they have increased prices even more such that their profit is HIGHER than it was before inflation.
QED
- lotsofpulp 4y agoThere is a term for that, called profit margin. And profit margins have not materially increased. https://www.macrotrends.net/stocks/charts/KR/kroger/profit-margins https://www.macrotrends.net/stocks/charts/KR/kroger/profit-m... https://www.macrotrends.net/stocks/charts/ACI/albertsons/profit-margins https://www.macrotrends.net/stocks/charts/ACI/albertsons/pro... Obviously, a 3% profit margin after a year of inflation is going to be nominally higher than a 3% profit margin before the year of inflation. Hence any whining about nominal increases in profit is innumeracy, or clickbait, especially for businesses that play in the sub 5% profit margin ranges. How low do people think grocery store profit margins should go? Have they tried successfully operating a business at 3% profit margin?
- adamsmith143 4y agoThis would be a cute reply if the data supported your idea. But it doesn't. https://www.bloomberg.com/news/articles/2022-08-25/us-corporate-profits-soar-taking-margins-to-widest-since-1950 https://www.bloomberg.com/news/articles/2022-08-25/us-corpor... Highest margins since 1950. Turns out there are businesses that aren't Grocers.
- deleted 4y ago[deleted]