President Joe Biden and the White House have ostensibly engaged in a case of misinformation. Or, if you are a political pessimist, they have participated in spreading disinformation. The curious case of greedflation is a terrific example of the mendacity emanating from 1600 Pennsylvania Ave., a falsehood used to evade responsibility for rampant price inflation scattered through every crevice of the world's largest economy.
Greedflation 101
Progressives will assert that inflation has been eradicated from the economic landscape. According to Keynesian darling Paul Krugman, if you eliminate food, shelter, energy, and used automobiles from the equation, there is no inflation at all. Biden recently has been railing against Corporate America for price gouging, junk fees, shrinkflation, and greedflation. Inflationary pressures persist throughout the worldwide economy, but this is not because corporations decided to metastasize from benevolent bodies in 2019 to malevolent monsters in 2024.
One of the best metrics to debunk this myth is the producer price index (PPI). Also known as wholesale prices, this measures how much domestic producers of goods and services spend. In other words, the consumer price index (CPI) is the shoppers' perspective, and the PPI is the vantage point of businesses.
Like the CPI and the personal consumption expenditure (PCE) price index, the PPI has eased substantially since 2022, reaching close to 12% and slowing to below 1% year-over-year. However, the cumulative effect has been immense, exceeding 23% since the early days of the coronavirus pandemic. By comparison, CPI has rocketed 21% since April 2020. Comparable statistics are seen in the core portions of the CPI and PPI, which omit the data's volatile energy and food components.
A top conclusion economists can make from observing these figures is that businesses have not transferred the entirety of the inflation penalties to the consumers. Of course, it is not only the PPI that can reaffirm these trends. The purchasing managers' indexes (PMIs), which determine the direction a sector is heading, highlight persistent input price pressures.
Indeed, if the global supply chain crisis were the primary cause of inflation, wouldn’t deflation rear its head by now? This is because Washington refuses to admit the truth: Astronomical fiscal and monetary expansions were the chief ingredients in the post-crisis inflation bomb. But who in the nation’s capital wants even to discuss this ugly reality?
Bidenomics Selling Falsehoods
If these numbers contradict what the White House is conveying to voters, why does the president continue to spout these egregious ideas? An essential factor is that the concept, once a fringe theory dismissed by economists, has support from the president’s mainstream allies and politicians adept at parroting the administration’s talking points.
Dictionary.com recently announced that it added "greedflation" to its book of words, defining the term as "a rise in prices, rents, or the like, that is not due to market pressure or any other factor organic to the economy, but is caused by corporate executives or boards of directors, property owners, etc., solely to increase profits that are already healthy or excessive."
Sen. Bob Casey (D-PA) recently introduced legislation to "crack down" on greedflation. The bill aims to ban price gouging nationally, extend more funding to the Federal Trade Commission, and punish firms accused of exploiting the COVID-19 public health crisis to bolster profits.
"Over the past few years, families across the Nation are finding their dollars don’t go as far as they used to," he said in a statement. "Even as inflation has slowed, families are still paying higher prices, thanks to corporate greed, or greedflation. Under the guise of inflation, corporations are raising prices on American families and raking in record profits to boot."
Blame the People?
It might seem unfortunate, but the public appears to be buying what Bidenomics is selling, even if it smells worse than expired anchovies. Various polls indicate that a considerable percentage of the population believes in the greedflation myth. A February Navigator Research survey, for instance, reported that 59% of respondents say corporate greed is a "major cause" of inflation. This is up from 44% in January 2022. A large 84% said that "corporations being greedy and raising prices to make record profits" is an inflation driver. No wonder Biden is incentivized to utter economic claptrap.
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