As I hope I always will be
In the What We Make post, I mentioned the possibility of discussing the whys behind what I talked about. My commitment to only sharing information and perspectives I am confident in means just researching the inflation part has taken me 10+ hours. I want to keep these kinds of posts freely available without locking them behind the paid subscription. For those of you who have, currently, or will support with a paid subscription, thank you for helping keep this post free for everyone. 😁
I will continue researching the causes of the other economic factors I discuss in What We Make.
New here? Welcome 😁. In my first post, Out of Many, One, I committed to us being opinionated, open-minded, and kind.
This is where I do that by sharing my perspectives which inform the stances I share here at Sowing Hope.
Americans have proven strong and resilient
The U.S. economy is strong with no signs of recession coming
The American people are the heroes of this story
Reasons for the economy
I have always heard workers were to blame for inflation. If you’d like to talk, I would love to discuss the complex topic of inflation and everything that influences it. In this post, though, I’m going to focus on one part, specifically: corporate profits.
I feel like we often neglect this part of the conversation. You know I am not one to claim companies are evil or billionaires have to be jailed because they made profits. I just also realize the NYTs, the Foxes, and other mainstream outlets are corporations for profit. And their bias causes them to avoid this part of the topic. And their bias makes their profits. And their bias is from their human-ness.
So we are going to talk about corporate profits and inflation today. 😁
The vertical gray bars show when U.S. recessions happened.
Corporate profits (1950s to April 2023)
Corporate profits continued growing in the 1990 recession and rebounded within about a year in the 2001, 2008, and 2020 recessions.
Companies in the U.S. have done phenomenally well since the fall of the Berlin Wall in 1989. From around $260 million in Q4 1989 to $2,800 million (or $2.8 trillion) in Q4 2022.
For reference, it’s like an average worker going from $62,000/year in 1989 to $670,000/year in 2022. It would be a very nice raise 😁
The recessions of 1990, 2001, and 2008 hurt median incomes when adjusted for inflation and took 5 to 6 years to rebound.
Workers have also done pretty well since the fall of the end of the Cold War in 1989. We aren’t at $670,000/year or anything, but definitely better than in 1989. 😁
Since the 2020 recession and until recently, wage growth has been less than inflation. Worker wages have beaten inflation in the past 4 months (I first mentioned this in Building Bridges) faster than in previous recoveries (i.e. 3 years rather than 5).
That means most of the inflation had to be from something other than workers.
Inflation (1950s to Aug. 2023)
The spike in inflation in 2021 and 2022 follows a similar path as the spike in corporate profits over a similar time (see above).
Fortunately, inflation has consistently been coming down since it peaked about a year ago. As I mentioned earlier, wages are now growing faster than inflation again. I’m hoping this lets families like yours breathe a little easier 😁
I did cut off some of the pre-1957 data so it lined up better. I encourage you to visit the link to see the full graph.
Influencers of inflation
In times past, about 60% of inflation was affected by increased labor costs.
This time, increased corporate profit was the majority of the reason. Nonlabor costs affected by Russia’s invasion and U.S. adversaries raising oil prices also impacted inflation.
With company profits growing at more historically reasonable rates (see below), it makes sense inflation is dropping, too.
I do want to mention the elephant in the room; I have heard some say that increased government spending is the reason for inflation (link). I’m just personally unconvinced a 2% raise for workers (the CARES Act of the previous administration and American Rescue Plan of the current administration gave $1,400 to workers, about 2% of median income) impacted inflation more than a 60% raise for companies (see below).
As always, I know reasonable minds can differ, and I welcome our differences in perspective. 😁 If you want more, historical data seems to fall short of suggesting government spending causes inflation (link) and I feel the CARES Act of the previous administration, the American Rescue Plan, the Inflation Reduction Act, the bipartisan Infrastructure and Jobs Act, and the CHIPS and Science Act helped get our economy back on track.
I digress. Regardless, we can all agree it is average Americans like you who are the heroes of this story. We got through this the way we always do: together. 🌱
Back to profits
The red line is the percent change in profits from a year before.
Notice huge increases in profits with a 60% year-over-year increase in 2021 when inflation was at its highest.
You see corporate profits returned to normal growth levels recently and inflation followed their drop.
As I’ve talked to others, I hear that families like yours and mine have started to feel a little more breathing room lately as a result. If that isn’t you, I hope you feel it soon. ❤️
Thank you so much for your attention. I know anytime we talk about the economy, it is complex with so many possible influences. My hope with this post is to shine a light on a part of the conversation I feel often is overlooked. I am not meaning to avoid other topics. I’m not trying to misrepresent anyone. And I’m definitely not seeking to vilify the companies. I hope I have highlighted a part of the discussion we sometimes overlook yet often agree on.
Companies should make a profit in capitalism, they just should avoid causing hardship for everyone else involved.
I will have a post in the near future where all subscribers can comment. I’m not sure what it will be yet, but I want to get all of your feedback, soon. I thought I would get it in the Chat (here), though, it seems most of you all prefer email over the app. That is totally good with me, it just means I needed to adjust to get your feedback 😁
If you would like to like this post, there should be a white ❤️ button all the way at the top and all the way at the bottom. If not, that’s fine, too. 😄
Also, if you’d like to talk about the post in a comment (paid subscribers only) or share the post with someone you think would like it, that’s also appreciated. No pressure, though. I just need to say all the things
Here is an article and video I enjoyed this week. Hope they bring you joy, too. 😁
Summary: Faith families continue the tradition of seeking reconciliation and fighting for justice by trying to acknowledge and correct wrongs against Native Americans.
Not Just Bikes
I enjoyed this video about ways to make places more enjoyable to travel in. The creator is based in Amsterdam, but much of what he shares could apply anyway. Hope you enjoy 😁