There is a power struggle between consumers and corporations

BY STEVEN KASZAB

Many companies have been able to raise their prices beyond their own increased costs over the past two years, swelling their profitability but also exacerbating inflation. That is very true in the automobile market, where dealerships are paying manufacturers for more inventory, while charging customers even higher prices, sending their profits toward record highs. They can do so blaming disruptions in the supply chain, and automotive parts, providing too few sedans and other vehicles. If there is an opportunity to make greater profits, these dealerships are going for it big time.

While production is generally increasing, and interest-sensitive demand cooling, pressures to reduce vehicle margins and prices have appeared. The greater volume of new vehicles may bring prices to bay, but certainly not reduce them quickly. Taking the profit is a limited time deal, and these businesses will surely advance profitability.

The Central Bank’s move to increase interest rates in an effort to reduce inflation will partly hinge upon how easily companies will surrender their hefty profits. If firms reduce their prices in order to bring about competition within the marketplace, price increases may slow and hopefully not result in job losses. There will be a struggle between holding onto larger profits and the Central Banks squeeze of the economy and quashing demand that creates and fuels inflation.

There is a power struggle between consumers and corporations, and with the support of the public authority, corporations must experience some financial pain. Image is everything today, and a corporation seen as a scrooge, treating consumers as afterthought financial partners within the market will suffer in many ways.

Our marketplace is still suffering from three forces of economic manipulation…

• Supply chains are still wounded by the pandemic. Supply chains have not fully healed
• Demand for products may be slowing down, but the momentum to grow remains
• Firms that are used to making huge profits are proving to be hesitant to lower their prices

Many firms believe there is still unmet demand for their products, and also believe that supply/manufacturing will not be roaring back any time soon. Profiteering firms still believe that consumers have been able to bear the rate increases and the increasing prices that will follow, no matter how out of whack our supply and demand sector remains.

Economists fear that interest rates must continue to rise farther to a point where consumers have had enough pain and we all see a pause in demand.

Even if inflation drops to acceptable levels, the debt clock continues to pound away, increasing in volume and financial influential importance.