WASHINGTON, DC – Following the U.S. Labor Department’s latest Consumer Price Index (CPI) report, a new analysis from government watchdog Accountable.US found many of the largest general consumer S&P 500 companies have admitted to benefiting from increased prices as their net profits increased year-over-year and they rewarded shareholders with billions in new shareholder handouts. The data is more evidence that while inflation is slowing, the Fed’s strategy of repeated interest rate hikes has been unable to contain a key driver of excessive consumer prices — corporate greed. On Wednesday, Federal Reserve Chair Jerome Powell is expected to announce whether or not to raise interest rates an 11th time since March 2022 as a chorus of economists, union leaders, and political figures have warned further increases could cost millions of Americans their jobs.
After an unprecedented 10 interest rate hikes in a row, it’s clear the corporate profiteering epidemic will persist no matter how many times the Fed doubles down. Higher interest rates haven’t stopped S&P companies, especially in the big food industry, from inflating consumer prices despite reporting billions in extra net earnings and over a trillion dollars in giveaways to wealthy investors. Corporate greed is a stubborn thing and requires serious action from Congress. The Fed has not seen an adequate return on its investment in a policy that has already created fissures in the economy that could lead to recession. It’s just not worth it.”
Liz Zelnick, Accountable.US’ Director of Economic Security and Corporate Power.
Big Food Unfazed by Higher Interest Rates: Today’s Labor Department report found “overall food prices rose 0.2 percent in May from the prior month, an increase after remaining flat the two months before” and “Prices for groceries rose 0.1 percent in May compared with the month before.” Meanwhile, Accountable.US’ review found General Mills, whose executives admitted to “getting smart about how we look at pricing” while implementing “list price increases,” saw its net income increase 16.5% to $2.7 billion in its FY 2022 and saw continued profit increases in the first nine months of its FY 2023. Additionally, the company spent over $2.12 billion in shareholder handouts and $1.2 billion on the acquisition of Tyson Foods’ pet treats business in its FY 2022 and has nearly matched shareholder handouts in just the first nine months of FY 2023. Read more in MarketWatch.
Accountable.US also found Tyson––whose executives touted seeing “significant pricing power of our portfolio with a year-over-year increase of 7.6%”––saw its net income increase from $3 billion in FY 2021 to over $3.2 billion in FY 2022 and rewarded shareholders with $1.35 billion in handouts––$652 million more than the previous year, including a 948.5% increase in stock buybacks.
Corporations Have No Plans to Back Off Price Increases Despite High Profits: A recent New York Times report found the average S&P 500 company increased its profit margin from the end of 2022, partially led by the consumer discretionary sector — all while spending a record $922.7 billion on stock buybacks and a record $564.6 billion in dividends. According to the Times: “Some of the world’s biggest companies have said they do not plan to change course and will continue increasing prices or keep them at elevated levels for the foreseeable future. That strategy has cushioned corporate profits. And it could keep inflation robust, contributing to the very pressures used to justify surging prices.”
Cracks Forming In Economy Under Sky-High Interest Rates: According to CNN: “Areas of the US economy have started to crack under the weight of persistently high inflation and a string of 10 consecutive rate hikes from the Federal Reserve. […] Some of the traditional recession indicators have been flashing red. Layoff announcements have quadrupled so far this year to 417,500, which — excluding 2020 — is the highest January to May total since 2009, according to a report from Challenger, Gray & Christmas released Thursday. Falling consumer confidence, monthly declines in the Conference Board’s Leading Economic Index, and drops in temporary help employment are also signaling that a downturn is just ahead. However, that long-predicted recession isn’t here just yet.”