February 14, 2024
Yes, I am serious. Today’s “Dealbook Newsletter,” is headlined “Rethinking the Prospects of a Soft Landing.” The piece makes the case that the higher-than-expected January CPI, coupled with other data points, raises questions whether inflation is under control.
In making this case one section tells readers:
“Worry extends beyond the markets. The prospect of higher inflation is weighing on consumers and small-business owners.
“Meanwhile, Krispy Kreme, Coca-Cola and Heineken each warned this week that stubborn inflation could hurt their earnings.”
Just to say the obvious (I guess not obvious to Dealbook writers and editors), if these big consumer product companies are worried that they are going to be hurt by inflation, it means that they think they lack the pricing power to raise their prices further. As many have noted, part of the pandemic inflation story has been large companies taking advantage of their market power to jack up profit margins.
The story here, insofar as it is accurate, is that the economy has changed enough that big firms no longer have the pricing power they did one or two years ago. That is good news in the battle against inflation, not the bad news we are being told here.
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