Powell wasn’t asked a single question about corporate profits driving inflation

Federal Reserve Chair Jerome Powell fielded questions for around 40 minutes on Wednesday following the central bank’s decision to impose another large interest rate hike, but not a single reporter asked about the extent to which record-high corporate profits are fueling inflation even as companies openly boast about their pricing power.

Progressive economists have estimated that corporate profits are to blame for at least 40% of price increases during the recovery from the pandemic-induced downturn, a disproportionate contribution to the stubbornly high inflation that is eating away at workers’ wages. Some have put the number at over 50%.

The notion that corporate price hikes are putting upward pressure on inflation—which has myriad causes—is hardly fringe. Lael Brainard, the Fed’s vice chair, acknowledged in a speech last month that “since the pandemic, significant supply and demand imbalances have coincided with large increases in retail trade margins in several sectors.”

“In some sectors, the increase in the retail trade margin exceeds the contemporaneous increase in wages paid to the workers engaged in retail trade, although this is not true in food and apparel,” Brainard said. “The return of retail margins to more normal levels could meaningfully help reduce inflationary pressures in some consumer goods, considering that gross retail margins are about 30 percent of total sales dollars overall.”

But corporations’ conscious decisions to raise consumer prices well beyond the actual costs of their goods and services didn’t receive any attention during Powell’s press conference.

Instead, the Fed chair and reporters from corporate outlets such as The Wall Street Journal, Fox Business, The Washington Post, and The New York Times focused on workers’ wages and the labor market, which Powell is explicitly trying to weaken. Reporters also pushed Powell on the risks of recession, which he admitted are growing, and the stock market’s reaction to the Fed’s latest announcement.

“Despite the slowdown in growth, the labor market remains extremely tight, with the unemployment rate at a 50-year low, job vacancies still very high, and wage growth elevated,” the Fed chair said during his opening statement. “Although job vacancies have moved below their highs and the pace of job gains has slowed from earlier in the year, the labor market continues to be out of balance, with demand substantially exceeding the supply of available workers.”

While Powell—who has previously said one of his objectives is to “get wages down”—conceded Wednesday that he doesn’t see recent wage growth as the “principal story of why prices are going up,” he and other Fed officials continue to enact aggressive rate hikes that will ultimately have the effect of cutting wages and potentially throwing millions out of work.

During his remarks Wednesday, Powell made clear that the Fed intends to raise interest rates further in the coming months and keep them elevated for the foreseeable future. Any talk of pausing the rate hikes to assess their impact on the economy, Powell said, would be “very premature.”

The Fed’s sixth interest rate increase of the year—the fastest pace of hikes since the Volcker era—heightened already widespread concerns that the central bank is pushing the U.S. and potentially the global economy into a terrible downturn.

In recent weeks, despite the lack of attention to corporate profits during Powell’s Wednesday press conference and his previous appearances, mainstream media outlets and newspapers have increasingly highlighted the link between company price hikes and inflation that progressive publications and lawmakers have been emphasizing for months.