A debate is intensifying about the role of corporate America in the recent wave of higher inflation.
Consumers are spending more, fuelled by record amounts of fiscal and monetary stimulus, rocketing home prices, excess pandemic savings and pent-up demand from two years of isolation. The combination of higher demand and short supply gives companies an opening to raise prices. The last stop on the income statement is profit margin. Tax rates haven’t changed in the last year, though interest rates have risen modestly. Yet, profit margins rose to a record 13% last year from 9% the year before, and analysts expect profit margins to reach 14% this year. With margins across the income statement at all-time highs and rising, it looks as if companies are raising prices more by choice than necessity.
It is called business...