Are Corporations Using Crises to Jack Up Your Prices?

When prices began skyrocketing in 2021, corporate America offered a unified explanation: supply chain disruptions. From grocery shelves to car dealerships, we heard the same refrain—global logistics snarls, material shortages, and labor issues were forcing companies to raise prices reluctantly. Fast forward to today’s tariff-induced price hikes, and we’re hearing familiar justifications.

But a deeper look at corporate financial statements tells a more complex—and troubling—story. Many companies didn’t just pass their higher costs onto consumers; they used widespread economic disruption as cover to expand their profit margins significantly. While Americans struggled with inflation, many corporations enjoyed record-breaking profits.

Today I’m examining the evidence: Are corporations exploiting crises to boost profits at your expense? And if so, what can we as consumers and citizens do about it?

The Gap Between Corporate Rhetoric and Financial Reality

When CEOs speak on earnings calls, they frequently cite “inflationary pressures” and “supply chain challenges” as reasons for raising prices. But their conversations with investors often tell a different story.

Take Procter & Gamble, maker of everyday essentials from Tide to Pampers. In January 2022, as Americans grappled with rising household costs, P&G’s CFO proudly told investors: “Price increases are driving a larger portion of our sales growth.” The company’s operating margin—the percentage of revenue remaining after paying for costs—actually expanded during this period.¹

P&G wasn’t alone. A Roosevelt Institute analysis found that in 2021, U.S. corporate profits reached their highest levels since the 1950s. Non-financial corporate profits increased 14% beyond pre-pandemic levels after accounting for inflation. Meanwhile, labor costs grew by just 3%.²

Isabella Weber, economist at UMass Amherst, describes this phenomenon as “sellers’ inflation,” where companies with significant market power use broader economic disruptions as an opportunity to raise prices beyond what their costs would justify.³

“Companies with market power can use the shelter of inflation to engage in price hikes that go beyond their rising costs,” Weber explained in her research on pandemic pricing patterns.

The Evidence in Numbers: Profits During Pandemic and Beyond

Let’s look at the hard data:

During 2021-2022, when inflation was peaking:

• Corporate profits as a share of GDP reached 12.5%, their highest level since 1950⁴
• The top 500 non-financial companies saw their operating margins increase by an average of 2.7 percentage points between 2019 and 2021⁵
• Food company Tyson Foods reported a 40% profit increase while raising meat prices by up to 20%⁶
• Oil giant Shell posted its highest quarterly profit in its 115-year history ($11.5 billion)⁷

When we compare price increases with actual cost increases, the pattern becomes clear. In competitive markets, we would expect companies to raise prices just enough to cover their increased costs. Instead, many seized the opportunity to expand profit margins significantly.

A Federal Reserve Bank of Boston study found that traditional supply-and-demand factors explained only about 60% of the inflation seen in 2021-2022. The remaining 40% appeared attributable to what economists call “markup increases”—companies charging more simply because they could.⁸

Today’s Tariff Talk: Same Playbook, New Crisis

The pattern continues with recent tariff implementations. When the Biden administration maintained many Trump-era tariffs and added new ones, particularly on Chinese goods, companies again cited these policies as necessitating price increases.

Treasury Secretary Janet Yellen acknowledged this dynamic in recent Congressional testimony, noting: “We have seen some evidence of companies using supply chain disruptions as an opportunity to increase prices beyond what their costs would justify.”⁹

The evidence appears in several industries affected by tariffs:

• Steel prices rose 215% between 2020-2022, far outpacing the 25% tariff imposed¹⁰
• Major appliance manufacturers raised prices 13-17% while their cost increases from tariffed components amounted to roughly 3-5%¹¹
• Electronics retailers passed along full tariff costs to consumers plus additional markups¹²

Why Can Companies Get Away With This?

Several factors enable this corporate behavior:

Market Concentration: When just a few companies dominate an industry, they can raise prices without losing customers to competitors. The American economy has grown increasingly concentrated, with the average industry seeing its top four firms control nearly 45% of the market, up from 26% in 1997.¹³

Information Asymmetry: Consumers can’t easily determine how much a supply chain disruption or tariff actually increases a company’s costs, making it difficult to identify unfair price hikes.

Essential Products: During crises, demand for many products becomes less elastic—people need food, medicine, and basic supplies regardless of price, limiting their ability to boycott or seek alternatives.

Coordinated Price Movements: When one market leader raises prices citing “supply chain issues,” competitors often follow suit without actual competitive pressure to keep prices lower.

Economist Mike Konczal of the Roosevelt Institute summarized the dynamic: “The pandemic created an environment where firms that wouldn’t normally have pricing power suddenly found they had it.”¹⁴

Consumer Impact: Disproportionate Burden

The consequences of opportunistic pricing fall hardest on those least able to absorb them. During the pandemic-induced inflation:

• The bottom 20% of income earners spent 38% of their income on necessities that saw the highest price increases¹⁵
• Food insecurity increased by 25% from 2019 to 2022¹⁶
• Medical debt grew as healthcare costs rose faster than inflation¹⁷

Even as wages rose during the tight labor market, price increases eroded purchasing power for most Americans. And while inflation has cooled somewhat, many of those elevated prices remain “sticky”—companies rarely reverse price increases even when their costs decline.

Is This Technically “Price Gouging”?

The legal definition of price gouging typically applies to essential items during declared emergencies, with specific percentage thresholds above which price increases are prohibited. By these narrow definitions, most pandemic and tariff-related price hikes wouldn’t qualify as “illegal price gouging.”

However, from an economic and ethical perspective, raising prices substantially beyond cost increases during periods of economic distress certainly constitutes a form of profiteering at consumer expense.

Former Labor Secretary Robert Reich puts it bluntly: “They’re not ‘passing along’ higher costs. They’re raising their prices because they can. Corporate profits are at record levels. Workers’ real wages are falling.”¹⁸

What Can Consumers Do?

While challenging corporate pricing power isn’t easy, consumers aren’t entirely helpless:

Knowledge Is Power: Track prices over time using apps like Camelcamelcamel for Amazon or Honey to identify when increases exceed reasonable levels. Understanding normal seasonal patterns helps distinguish between legitimate fluctuations and opportunistic hikes.

Strategic Purchasing: When possible, delay non-essential purchases during supply disruptions when prices are likely inflated beyond actual cost increases. Buying used items, exploring alternative brands, or finding product substitutes can reduce your exposure to gouging.

Support Anti-Monopoly Enforcement: The ultimate solution to excessive corporate pricing power is more competition. Support political candidates and policies that strengthen antitrust enforcement and prevent harmful mergers.

Consumer Organizing: Online communities like Reddit’s r/Anticonsumption or the Consumer Federation of America help coordinate responses to perceived price gouging, from boycotts to public awareness campaigns.

Demand Transparency: Press for regulations requiring companies to disclose when price increases exceed cost increases during declared emergencies or supply disruptions.

Use Price-Tracking Tools: Apps like GasBuddy (for fuel) or Basket (for groceries) help identify retailers with more reasonable pricing and can support community reporting of dramatic price hikes.

The Political Divide: Democrats vs. Republicans on Price Gouging

The two major American political parties offer starkly different diagnoses and solutions to the problem of crisis-related price increases, reflecting their broader economic philosophies.

The Democratic Party Approach

Democrats have generally been more willing to directly attribute inflation to corporate price gouging and propose interventionist solutions. During the pandemic-era inflation spike:

• President Biden repeatedly criticized corporations for using supply chain disruptions as cover for excessive price increases, stating in his 2022 State of the Union address: “Too many families are struggling to keep up with their bills… while corporations have record profits.”²⁰
• Congressional Democrats introduced multiple bills targeting crisis profiteering, including the COVID-19 Price Gouging Prevention Act and the Stop Gas Price Gouging Tax and Rebate Act.²¹
• In May 2022, the House passed the Consumer Fuel Price Gouging Prevention Act, which would give the Federal Trade Commission new powers to penalize oil companies for excessive price increases during energy emergencies.²²

The Democratic policy toolkit typically includes:

• Direct price controls during emergencies
• Windfall profit taxes on crisis-related corporate earnings
• Expanded FTC authority to investigate and penalize price gouging
• Increased funding for antitrust enforcement
• Public investment in supply chain resilience

Senator Elizabeth Warren has been particularly vocal on this issue, proposing legislation that would prohibit price increases that exceed the increase in costs plus a reasonable margin during emergencies.²³

The Republican Party Approach

Republicans generally reject the premise that corporate pricing practices significantly contribute to inflation, instead focusing on:

• Government spending as the primary inflation driver
• Regulatory barriers that constrain supply
• Energy policies that increase production costs
• Workforce shortages exacerbated by pandemic-era benefits

When the aforementioned price gouging legislation passed the House in 2022, Republican representatives unanimously opposed it, arguing it represented Soviet-style price controls that would worsen shortages.²⁴

The Republican policy toolkit typically includes:

• Deregulation to increase supply and foster competition
• Tax cuts to stimulate investment and production
• Reduced government spending to combat inflation
• Trade policy reforms to lower input costs
• Energy production expansion to reduce fuel costs

Senator John Thune articulated the Republican position during 2022 inflation hearings: “Rather than attacking American businesses, we should focus on reducing regulatory burdens and unleashing American energy production to increase supply and lower costs.”²⁵

Which Approach Better Protects Consumers?

The evidence suggests a mixed verdict, with strengths and weaknesses to both approaches.

The Case for Democratic Policies

Empirical research offers some support for direct intervention:

• A 2022 Roosevelt Institute study found that countries with stronger price gouging laws experienced lower inflation during the pandemic, with price controls effectively limiting opportunistic corporate behavior.²⁶
• Historical precedent from the 1970s shows that strategic and temporary price controls, when properly implemented, can break inflationary spirals without causing significant shortages.²⁷
• The market concentration data clearly demonstrates that many US industries lack sufficient competition to discipline prices naturally, suggesting a need for regulatory guardrails.

The Case for Republican Policies

Conservative economists make valid points about the risks of intervention:

• Price signals play a crucial role in allocating resources efficiently during shortages; distorting these signals can exacerbate supply problems.
• Regulatory burdens do increase production costs, which ultimately get passed to consumers.
• Government spending during the pandemic did contribute significantly to inflation, though debate continues about the magnitude relative to supply disruptions.
• Price controls, if poorly implemented, risk creating shortages and black markets.

A Balanced Assessment

The most effective approach likely incorporates elements from both perspectives:

• Targeted and temporary price interventions during acute crises, particularly for essential goods where price signals play less role in production decisions
• Structural reforms to increase market competition through enhanced antitrust enforcement
• Supply-side policies to reduce regulatory barriers where they unnecessarily constrain production
• Investments in supply chain resilience and strategic reserves to prevent future disruptions

The key is distinguishing between legitimate market responses to scarcity (which help allocate resources efficiently) and opportunistic profiteering (which merely transfers wealth from consumers to shareholders).

Policy Solutions That Could Help

Beyond individual action, addressing this problem requires policy solutions that could draw support across the political spectrum:

Strengthen Price Gouging Laws: Most state laws only cover limited products during formally declared emergencies. Expanding these protections could deter opportunistic pricing during broader economic disruptions.

Enhanced Market Concentration Reviews: More aggressive scrutiny of mergers and market dominance would help restore competitive pressure on prices.

Excess Profit Taxes: Temporary taxes on profits that exceed pre-crisis levels would reduce the incentive to exploit disruptions for windfall gains.

Increased Price Transparency: Requiring large retailers to maintain historical price data accessible to consumers would make excessive increases more visible.

Strategic Reserve Expansion: Beyond oil, government-maintained reserves of critical materials could be released during supply disruptions to counteract artificial scarcity.

Potential Ripple Effects of Stricter Anti-Gouging Measures

If America took a harder stance against crisis-related price gouging, the effects would ripple throughout the economy in complex ways:

Potential Benefits

Reduced Inflation Volatility: Limiting opportunistic price increases during crises would reduce inflation spikes, creating more predictable economic conditions for households and businesses.

More Equitable Distribution of Economic Pain: Crisis costs would be more evenly shared between corporations, workers, and consumers rather than disproportionately burdening households.

Restored Consumer Confidence: When people trust that prices reflect genuine economic forces rather than profiteering, they’re more likely to maintain spending, potentially reducing recession risks during crises.

Innovation Incentives: If extracting higher prices from captive consumers becomes less viable, companies might instead focus on efficiency improvements and genuine innovation to maintain profitability.

Potential Risks

Reduced Supply Incentives: Price caps could reduce the profit motive for expanding production during shortages, potentially extending supply disruptions.

Capital Flight: Excessive profit restrictions might discourage investment in sectors subject to price controls, reducing long-term production capacity.

Implementation Challenges: Defining “excessive” price increases requires complex determinations about reasonable profit margins across diverse industries.

International Competitiveness: If anti-gouging measures increase regulatory complexity, they could disadvantage American companies in global markets.

The historical record from countries that have implemented various forms of price intervention suggests these risks can be managed through careful policy design. Temporary, targeted interventions focused on truly essential goods during acute crises appear most successful, while permanent, broad controls typically generate more significant distortions.²⁸

As economist Isabella Weber notes: “The question isn’t whether to use price controls, but when and how to use them as part of a broader policy toolkit for managing economic turbulence.”²⁹

Looking Forward: Building a More Resistant Economy

The COVID pandemic and subsequent supply chain crisis revealed deep vulnerabilities in our economic system. As climate change and geopolitical tensions promise more disruptions ahead, we need to build more resilience against price exploitation.

This means diversifying supply chains, localizing more production of essential goods, strengthening consumer protection agencies, and most importantly, reversing the decades-long trend toward market concentration that has given corporations unprecedented pricing power.

Former Federal Reserve economist Claudia Sahm suggests: “The lesson from recent years isn’t that we need to choose between blaming ‘corporate greed’ or ‘supply chains’ for inflation. The reality is that supply disruptions created the conditions where market power could be exercised more aggressively than usual.”¹⁹

The Bottom Line

The evidence strongly suggests that many corporations did exploit the cover of supply chain disruptions and tariffs to raise prices beyond what their increased costs would justify. This opportunistic pricing contributed significantly to the inflation that has strained family budgets over the past three years.

As consumers, our most powerful weapons are awareness, selective purchasing, and political organization. By recognizing when price increases reflect genuine cost pressures versus opportunistic profit-seeking, we can make more informed choices about when and where to spend our money.

And as citizens, we can demand an economy that works for people, not just profits—one where competition, transparency, and accountability limit the ability of corporations to exploit crises at our expense.

The good news? Corporate pricing power isn’t inevitable. It’s the product of policy choices we’ve made over decades, and with sufficient public pressure, these choices can be reversed. The next time a company blames “supply chain issues” for a price hike, we should all be ready to ask: “Is that the whole story?”