Biden Calls Out High-Profiting Grocers Not Passing Savings to Consumers

Summary

  • The Biden administration is warning companies that if their input costs have decreased, they should pass these savings onto the customers, explained Jared Bernstein, the chair of Biden’s Council of Economic Advisers.
  • Increased profit margins, especially within the grocery sector, are under scrutiny, though no specific companies have been named.
  • Large grocery corporations such as Walmart, Kroger, and Albertsons are registering a gross profit margin of over 20%, which aligns with pre-pandemic numbers.
  • Biden has been advocating for cost reduction in grocery prices, a factor that plays a significant role in the November re-election campaign.
  • Despite favourable economic data, voters are still concerned about high costs impacting Biden’s approval ratings.
  • Bernstein referenced the University of Michigan consumer survey that reported a rise in consumer confidence, the strongest it’s been since July 2021.
  • Efforts are being made to lower costs in areas that are particularly sensitive for Americans, like eggs, milk, appliances, airfares, used cars, and gas.

Biden Administration’s Retail Vision

Bernstein, chair of Biden’s Council of Economic Advisers has affirmed the president’s intent to hold companies accountable. He said, “if you’re a firm with reduced input costs and you’re not forwarding these savings to the consumer, the president will call you out.”

He also noted an observed increase in profit margins, particularly within the grocery sector, hinting that these savings need to be passed onto consumers.

Grocery Store’s Margins

No specific corporations were mentioned by Bernstein. However, large grocery companies, including Walmart, Kroger, and Albertsons, are reporting gross profit margins of over 20%, which mirrors the statistics recorded pre-COVID-19.

The grocery retailers’ revenues in comparison to their costs have seen a significant surge since the pandemic; a statistic that tracks retail mark-ups closely.

Biden’s Consumer Advocacy

The President’s call for lower supermarket prices is instrumental in his re-election. Despite robust economic indicators, voters’ concerns about high prices negatively affect his approval ratings.

Although inflation is receding and the job market remains tight, wage growth continues to surpass price growth, which should reflect as enhanced confidence over time, mentioned Bernstein.

The Impact on Forex or Trading

Such regulatory interventions and market shifts have the potential to impact the stock market values of these retail grocery giants, which and could further trickle down to forex or trading.

PIP Penguin
Logo