Target CEO clears the air on ‘price gouging’
Target CEO Brian Cornell has rebutted Vice President Kamala Harris’ claim that corporate greed is the reason behind soaring prices in America.
In an interview with CNBC, Cornell said price gouging—or increasing prices beyond a reasonable level—is a surefire way to go out of business.
“We’re in a penny business,” Cornell said, noting the extremely thin profit margins in the retail and supermarket industries.
According to Jitender Miglani, the principal forecast analyst at Forrester, U.S. retailers have generated average profits of between 2.8% and 3.5% over the past 20 years.
If a company like Target were to raise prices to boost profits, customers could simply check their phones for cheaper alternatives and go elsewhere. Cornell said America’s retailed landscape is “a very competitive space” that would penalize price gouging.
“Is there a more competitive space than retail? Big multinationals, local retailers [...] physical stores, digital stores” give shoppers more options than any other country in the world, Cornell said.
The CEO explained that Target “reduced prices on 5,000 items” in the second quarter alone.
Lawmakers know that Americans are fed up with inflation and are likely to vent those frustrations at the polls this November. But laying the blame solely on retailers ignores the trillions of dollars in extra money that have been circulating through the economy since Covid.
Most of that money didn’t come from economic growth but was printed out of thin air by the last two presidential administrations.
Money printing, not price gouging, is to blame
According to business executive and former LIbertarian Party treasurer Todd Hagopian, Americans should blame the U.S. government for their inflation problem.
“Government inflation is the cause,” not price gouging on food, Hagopian explained.
This view is corroborated by Mark Kritzman, a senior lecturer at MIT Sloan. According to Kritzman’s 2023 research paper, 42% of the inflation since Covid could be attributed to government spending.
By comparison, only 17% of the inflation spike can be attributed to consumer inflation expectations and 14% can be blamed on high interest rates.
Although Kritzman didn’t blame the government for its response to Covid, there’s no doubt that “it did cause this big spike in inflation,” he said.
“What was surprising is not just that [the driver] was federal spending but that it was so overwhelmingly federal spending,” he explained.
Four years after the onset of Covid, Americans are still feeling the inflation overhang. A new MarketWatch Guides survey revealed that 47% of Americans say 2024 has been the most stressful year of their lives financially.
Nearly nine out of ten respondents said they’re feeling some kind of financial stress, largely due to higher prices on essential goods.
Although the Consumer Price Index (CPI) has fallen to an annual rate of 2.9% as of July, the cumulative inflation Americans have paid since February 2020 is 20.8%.