by Wolf Richter
Wolf Street
The huge spike in profits during the high-inflation years backtracked in some industries but got even hotter in others.
Corporate pre-tax profits in non-financial domestic industries fell by 1.4% in Q1 from Q4, to seasonally adjusted annual rate of $2.66 trillion, according to the by-industry data on corporate profits released today by the Bureau of Economic Analysis.
Year-over-year, profits were still up by nearly 10%, despite the drop in Q1, as profits had surged in the prior three quarters. Since Q2 2020, profits have doubled! This is why some have termed this episode of inflation “greedflation.” But that’s what big inflation is all about: Companies raising prices far faster than their costs went up, and their customers being willing to pay whatever. It’s the Fed’s job to knock some sense back into these economic players by making the cost of capital painfully high.