U.S. President Joe Biden delivers remarks during an event to celebrate the anniversary of his signing of the 2022 Inflation Reduction Act legislation, in the East Room of the White House in Washington, U.S., August 16, 2023.
Kevin Lamarque | Reuters
In recent weeks, President Joe Biden has been doing everything he can to point the finger at big corporations for high prices.
“Too many things are unaffordable,” the president said.
“Stop the price gouging,” Biden said on another recent occasion.
The blame game may be good retail politics, and the president has announced some real actions to alleviate consumer financial stress, forgiving as much student debt on the margins as he can under the law, unveiling various plans to eliminate “junk fees,” and using new powers under the Inflation Reduction Act to bring down key drug prices.
Some recent research supports the case that corporations have taken more advantage of the current inflationary era than they really need to do. But amid the political pressure, don’t expect corporate America to be swayed.
As the Federal Reserve signals for the first time that it’s getting comfortable with the decline in inflation, and even short of declaring “mission accomplished” seemed to say this week it doesn’t wholly disagree with the market view that rates cuts are the next phase in its monetary policy, the one major force in the economy not talking about cuts in a major way is corporations.
That’s been on the mind of Fed presidents as the central bank contemplates a big shift. Richmond Fed President Tom Barkin, a former corporate sector CFO, recently told CNBC that one area he monitors and speaks to companies about is price setting. Companies won’t be giving up their power to raise prices “until they have to,” Barkin, who will be a voting member of the FOMC next year, said.
It’s been a hard-won advantage. Over the past two decades, price setters “have been beaten up,” Barkin said, by the combination of ecommerce, globalization, access to…
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