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President Biden and other Democratic lawmakers have frequently blamed corporate price gouging for chronic inflation that has Americans paying more for everyday necessities.
But new research published by the Federal Reserve Bank of San Francisco suggests that corporate greed is not a primary driver of the inflation spike that began in early 2021.
Although some companies jacked up prices after the COVID-19 pandemic – markups surged for things like gasoline and cars in 2021, for instance – the researchers found the overall markup rate has generally remained flat, consistent with previous economic recoveries over the past three decades.
"These patterns suggest that markup fluctuations have not been a main driver of the ups and downs of inflation during the post-pandemic recovery," wrote Sylvain Leduc, Huiyu Li and Zheng Liu in the bank's weekly Economic Letter.