The point is that price gouging is nothing new. Monopolistic pricing tactics didn't begin in 2022 so to act like this is a main culprit in inflation is absurd. Companies have always set their prices based on what they feel is best for their company's profits (some are more short-term thinking than others). Costco tries to play the long-game by keeping loyal customers (and paying employees well as well). Other companies try to get as much as they can whenever they can. I personally think Costco is a model company. It would be better if more companies had this long-game outlook instead of thinking more about short-term profits.
https://thehill.com/policy/finance/...ow-the-auto-industry-capitalized-on-pandemic/ New cars are for richer people: How the auto industry capitalized on pandemic The U.S. auto industry is changing its business model to produce fewer vehicles at higher prices, effectively embracing the supply chain problems that triggered inflation across the global economy at the beginning of the coronavirus pandemic. The result is that consumers are being priced out of the market for new cars as automakers seek higher profit margins from constrained supplies. The average price of a new car hit a record in November of $48,681. “Because there’s been this shift, the people who can buy [new] cars now are much more affluent than before,” Michelle Krebs, an analyst with Cox Automotive, said in an interview. “Less affluent people have fallen out of the market. They’ve fallen into the used car market or they’ve fallen out of the market altogether.” From 2017 up to the pandemic, the U.S. auto industry was making about 11 million vehicles per year, according to data from the St. Louis Federal Reserve. Since the pandemic, automakers have averaged fewer than 10 million vehicles a year, for a production cut of more than a million cars and trucks — or as much as 20 percent in some years — as measured by an average of the Fed’s seasonally adjusted annual rate of production. Production was on course to average 10.6 million vehicles in the third quarter of 2022 but has since been revised back down to finish at 10.2 million vehicles on the year as a whole. Automakers say this is due to a shortage of the chips used in the computers that help modern vehicles run. But these shortages have been improving since at least the middle of last year, according to Wall Street analysts, while production has continued to lag. Meanwhile, new car prices have skyrocketed, hitting record highs in summer last year and again in the fall. New car prices have gone up 20 percent since the beginning of the pandemic, far outpacing core inflation, which has risen only 12 percent over the same period, according to the Labor Department. These prices have translated into high profits for car manufacturers over the course of the pandemic. GM reported a decade-high profit of more than $10 billion in 2021 and projected a similar number for 2022, as Ford posted its best operating income in that year since 2016. “The U.S. market, like other regions, has been characterized by robust pricing power across original equipment manufacturers,” Jose Asumendi, head of European automotive research at J.P. Morgan, wrote in a note to investors last summer. “This has been underpinned by low inventory levels.” These low inventory levels were also a boon to dealers over the course of last year. Over the summer, a survey by Cox Automotive found that as only 25 percent of dealers were reporting growing inventory, more than 80 percent were reporting growing profits. Automakers have been saying that the change to lower production and higher margins is here to stay. “Overall, we’re going to remain disciplined. I do think there’s an opportunity to drive strong margins,” GM CEO Mary Barra said on her company’s third-quarter earnings call last fall, referring to production levels. “As we’re working through this lower inventory and these opportunities that we’re seeing today, we’re working on how we make them a normal part of our business as we go forward,” Ford financial boss John Lawler said in 2021. He echoed Ford CEO Jim Farley, who said, “I want to make it extremely clear to everyone, we are going to run our business with a lower day supply than we have had in the recent past because that’s good for our company.” While economists say it’s unlikely that automakers colluded to produce these new low-volume, high-margin market conditions, they’re noticing how favorable they are to the auto industry while hurting middle-market consumers. “It would have been a tall order for them to coordinate the kind of production cuts that we have seen. The pandemic forcefully pushed them into a different equilibrium, which at the moment they seem to be enjoying, and there aren’t any obvious mechanisms for them to jump out of it,” Daniil Manaenkov, an economist with the University of Michigan, said in an interview. “Without the pandemic and without a significant disruption to supply and demand, I don’t think we would have seen this. It’s possible that all the manufacturers would have collectively loved to be in this low-volume, high-margin model, but it was not a possible equilibrium outcome unless they colluded among themselves,” Manaenkov said. The dynamics of unilaterally lowering production to jack up prices is familiar from how OPEC works in the crude oil market, but that’s not supposed to happen in a free market with genuine competition. Nonetheless, none of the big automakers seems to be going in for a high-volume, low-cost strategy aimed to capture market share and reduce prices for consumers. “It’s similar to OPEC in some ways and different in other ways,” Manaenkov added. “It’s similar in the way that they jointly cut — that output is low across the board. It’s different in the way that OPEC does it willingly, and manufacturers were sort of forced into that equilibrium by outside factors.” The case of higher margins driving price increases in the auto industry raises broader questions about whether inflation during the pandemic was caused more by disrupted supply and high demand, as the conventional wisdom goes, or by the private sector seizing the opportunity to simply boost their bottom line. But it also noted that “between 2020 and 2022, an estimated 54 percent of the average price increase in the United States non-financial sector was attributable to higher profit margins, compared to only 11 per cent in the previous 40 years.” “Markups have been a major factor. In this context, competition policy and price controls have a critical role to play,” the report went on.
Remember the Putin price hike? Joe Biden, Democrats and extreme liberal media continued to mouth off that nonsense. What they should have said is the NATO price hike. Now, there is truth to that with the price of oil and natural gas headed higher even in the US. This just in. Southern California Gas said natural gas prices in the US is headed higher and their customers now have to pay double, 100% increase in prices starting January 2023. I got a 50% price hike last month. Now, Joe Biden and Democrat voters should repeat, thanks Brandon. Yeah, it is all on you voters who voted for more of the same in the last midterm elections.
I believe.Costco has like a fixed 15% margin/markup on all products.across the board which is why they sell things so cheaply. They make very little on water but make it up on volume and water gets you in the door to buy other stuff. Forgot where I read this. They also make secondary income from memberships that stores cannot make so their margins can be lower. Unique model that.works great for them. Also makes you realize inflation clearer because when they raise their prices it truly is passing on costs.
I did not know that; thanks for bringing it up. It also makes clear why management was so resistant to gouge in the last earning call(s) and on hot dogs.
Yeah I think the hot dogs are bascially to cover the cost of the food court since it brings in people. Kind of like Microsfot losing money on Xboxes but making it all on games which you dont buy if you dont get the XBox. Costco model is really working for them well and was proven attractive in this recent market environment. Water used to be $2.99 for a 36 case and now is $4.25? Box of SKinny Pop bags of popcorn went from $17.99 to 19.99 I think. I assume if Costco's policy is still in place these are all logistics and seller price increases passed on. The one negative is if costs explode their margins have little room to absorb so sometimes earnings get hurt and the stock drops which is in the past when I have bought COST because COST usually corrects in a quarter or two by finally absorbing hte costs or adjusting pricing. Sellers used to fight like crazy to get into Walmart but it feels like this is shifting to Costco as the number of brands outside of Kirkland brand is growing every year. For example in clothing there is now Champion and Addidas. Granted this must be made for Costco product lines but it is really cheap. The really ridiculuos is I saw a $25,000 diamond tennis bracelet in Costco...... yeah I am not buying jewelry in Costco but damn...
US retailers now forecast double-digit year-over-year declines in imports for each month through May as the eastbound trans-Pacific trade returns to pre-pandemic cargo volume. Asian Importers are going to be seeing logsitics costs back to pre covid levels. If they are still at extremely high prices then it is simply capitalism/price gouging .