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Corporate Profits Contributed a Lot to Inflation in 2021 but Little in 2022—A Pattern Seen in Past Economic Recoveries

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Abstract

Corporate profits rose quickly in 2021 along with inflation, raising concerns about corporations driving up prices to increase profits. Although corporate profits indeed contributed to inflation in 2021, their contribution fell in 2022. This pattern is not unusual: in previous economic recoveries, corporate profits were the main contributor to inflation in the first year and displaced by costs in the second year.

Suggested Citation

  • Andrew Glover & Jose Mustre-del-Rio & Jalen Nichols, 2023. "Corporate Profits Contributed a Lot to Inflation in 2021 but Little in 2022—A Pattern Seen in Past Economic Recoveries," Economic Bulletin, Federal Reserve Bank of Kansas City, pages 1-4, May.
    • Handle: RePEc:fip:fedkeb:96344
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    File URL: https://www.kansascityfed.org/Economic%20Bulletin/documents/9526/EconomicBulletin23GloverMustredelRioNichols0512.pdf
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    1. Andrew Glover & Jose Mustre-del-Rio & Alice von Ende-Becker, 2023. "How Much Have Record Corporate Profits Contributed to Recent Inflation?," Economic Review, Federal Reserve Bank of Kansas City, vol. 0(no.1), pages 1-13, January.
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    Cited by:

    1. Cardani, Roberta & Pfeiffer, Philipp & Ratto, Marco & Vogel, Lukas, 2023. "The COVID-19 recession on both sides of the Atlantic: A model-based comparison," European Economic Review, Elsevier, vol. 158(C).

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    More about this item

    Keywords

    corporate profits; inflation; macroeconomics;
    All these keywords.

    JEL classification:

    • B22 - Schools of Economic Thought and Methodology - - History of Economic Thought since 1925 - - - Macroeconomics
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • G3 - Financial Economics - - Corporate Finance and Governance

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