When the Shortage is the Strategy

I commonly hear two different responses when people discuss whether the United States is in a recession. I hear “What recession?” and “Everything is expensive now!” All while credit card debt hit an all-time high last year ($1.28 trillion, Q4 2025). More “regular” people are living paycheck to paycheck, and closer to homelessness than ever before. 111 million Americans, ~40% of adults cannot pay their credit card balance in full each month. [1] Contributing to the issue is a single, simple business practice: constrain supply, raise prices far beyond what the constraint justifies, and then refuse to lower them.

The pandemic is where companies discovered it worked, with the perfect cover of confusion, panic, and unknowns. It was the proof of concept. When global supply chains broke down in 2020, the average markup over cost jumped from 56% to 72% in a single year — the fastest increase since 1955. [2] Corporate profits have risen 50% since; real hourly wages, only 3%. [3] As far as the general public knew, who was to say whether it was the pandemic creating shortages, or higher upstream commodity pricing. Few knew, and it certainly wasn’t a priority. Corporate profits drove more than a third of inflation from the start of the pandemic, and 53% of it by mid-2023 (after supply chains had recovered). In the forty years before, they drove 11%. [4] This format increased corporate confidence, and laid out a plan for every CEO and CFO [of large market companies] in the country.

In 2026, with reducing regulations, rampant collusion, lack of competition, and direct evidence (the pandemic) that corporations can gouge consumers without concern, we are in a dire circumstance that has caused goods to increase in cost 3x (or more) in 6 years. It’s truly unprecedented, and in my opinion, everyone should be aware of the specifics. Because even if you are one of the fortunate that are still able to afford your quality of life, there are things you can do for those that are closer to not being able to.

Rockets and feathers

The process of increasing prices more than constraint demands has been exceedingly popular across industries lately. Its academic name is Asymmetric Price Transmission, but it’s commonly known as Rockets and Feathers. Describing prices that rise like rockets, but fall like feathers. [5]

S&P 500 net profit margins hit an all-time high in Q2 2026, reaching 16.9%, up from the 10-12% range that held for most of the prior decade. [6] Workers’ share of national income fell to 52.9%, the lowest level recorded since the data series began in 1947. [7] 401(k) hardship withdrawals have tripled since 2020. [8]

At the CNBC CFO Council Summit in late 2023, Richmond Fed President Tom Barkin polled the executives in the room about their pricing plans: a majority said they would raise prices, a minority said they would hold, and not a single one said they would lower them. Companies won’t give up pricing power “until they have to,” Barkin said, noting that before COVID, most companies “really weren’t into raising prices [as they] didn’t think they had the power to do it.” [9]

• Corporate profits hit $4.42 trillion in Q1 2026, more than double the 2010 level. [10]
• In Q2 2026, S&P 500 earnings grew 50.4% while revenue grew 15.0%. This represents fewer sales, but higher prices on fewer units. [6]

“Obviously, our goal if a recession hits, and commodity costs come down, would be to then get a gap, maintain a gap going forward where obviously, we’re maintaining more price than the decrease on the commodity.” [11] - DuPont CEO Edward Breen

Since 2020, the same pattern has played out across at least eleven major consumer categories. Eggs, cars, rent, groceries, gasoline, auto insurance, lumber, shipping, building materials, pharmaceuticals, baby formula. Each with its own supply shock, each with the same result: prices went up, profits hit records, and when the constraint eased, the prices stayed.

“We don’t reduce prices on the back end of these increases.” And: “A nice light recession would be perfect for us because it would bring raw material costs down even more.” [12] [13] - H.B. Fuller CEO Jim Owens

The stock market is rewarding this behavior. PepsiCo posted nine consecutive quarters of volume decline while raising prices 10-17%. Revenue still grew. [14] Across consumer packaged goods from 2021 to 2023, dollar sales rose 13% while unit volume fell 6%. Every dollar of growth came from pricing, not demand. [15] And when companies break the pattern, they’re punished. Albertsons cut its full-year guidance in July 2026 as it invested in lower prices to hold off Walmart and Aldi, and the stock fell 21% in a day. [16] BJ’s Wholesale beat its earnings estimates in May 2026 and fell 8% anyway, on a ten-basis-point decline in its merchandise margin. [17]

“Why would I be the first to cut my margins when we just went through a period where we had the world’s best excuse [inflation] to recover margins?” [9] - Esade marketing professor Marco Bertini

“Imagine I am the first to say I am holding on prices, and make that known to customers? That’s how a price war starts and the competitive advantage from being the ‘good guy’ lasts two seconds. No one wants a race to the bottom. The gains over the past few years evaporate in a few months.” [9] - Esade marketing professor Marco Bertini

“We’re all a bunch of cars on a highway… Who hits the brakes first? Who wants to hit the brakes before the person in front of them hits the brakes?” [9] - Anonymous CFO on the CNBC call

Ongoing collusion

Every pattern above can be explained without conspiracy. Costs rose, firms responded independently, nobody wanted to cut prices first. That interpretation is reasonable, it just requires ignoring how often these same industries have been caught coordinating on purpose. Price fixing is not a theory about how corporations behave. It is a category of federal crime with a long prosecution record.

Samsung, SK hynix, and Micron hold about 90% of the global DRAM market. Samsung and SK hynix pleaded guilty to fixing DRAM prices in 2005; Micron avoided penalty by reporting them. In June 2026, seventeen plaintiffs filed a class action in the Northern District of California alleging the three used a coordinated pivot to AI memory as cover to cut DDR3 and DDR4 output, with prices up roughly 700% in four years. [27] The allegations are unproven at this time. A nearly identical case was dismissed in 2020 and upheld on appeal in 2022, the Ninth Circuit holding the conduct “more likely explained by lawful, unchoreographed free-market behavior”, that the law requires an actual agreement, not the conscious parallelism common in a three-supplier market.

Three companies controlling ninety percent of a market can each cut supply and raise prices, and the law calls it competition. The system doesn’t punish collusion, so it’s a rational business approach to take advantage of the consumer to benefit the real product, share price.

Tariff refund

The Supreme Court struck down IEEPA tariffs in February 2026, making approximately $166 billion in refunds available to companies. [28] [29] Technically Judge Richard Eaton at the Court of International Trade ordered the refunds. These are refunds for tariff costs that companies had already passed through to consumers via price increases. $100B of it has already been paid out. [30] The prices didn’t come back down. The refunds went to the companies. This is what they had to say about the tariffs:

• McCormick CFO Marcos Gabriel: “We are going to use the majority of the tax refund to offset these higher costs.”
• PepsiCo CFO Steve Schmitt: “We will be using the tariff… refunds to help offset some commodity inflation.”
• Polaris CEO Mike Speetzen: “Positive net pricing more than offset higher commodity costs.”
• Descartes’ Jackson Wood: “Recapturing those duty payments is really going to be about making their businesses whole. It’s unlikely to bring much relief to the U.S. consumer any time soon.” [29]

Note: Of 22 companies reviewed, half adjusted executive bonuses upward to exclude tariff costs from performance calculations. [31] Meaning consumers paid the tariff through higher prices, the company got the money back, and the executives were scored as though the tariff had never happened.

Corporations are not acting in your best interest, they are doing anything they can to increase profit.

“We’ll continue to offset a portion of the cost impacts with price increases.” [32] - Procter & Gamble CEO Jon Moeller, January 2022

Procter & Gamble predicted $800 million in windfall profits by retaining savings from falling commodity costs rather than passing them to consumers. [4]

Stop buying at inflated prices

Consumer sentiment has been sitting at recession levels since late 2025, and we need to behave like it. [33] 124,000 unsold new homes [34] and record car ages [35] show the truth of American finances in 2026. The corporations are attempting to convince consumers that there is nothing wrong, so that they can sustain their profits. They’re banking on you not noticing.

We should be purposefully delaying purchases. It is the most logical move with inflation, the ongoing war in Iran, and the predatory profits currently recorded. The only option consumers have right now is refusal, and historical examples say it works, but only if enough partake.

In January 2025, Croatian consumers organized a retail boycott through a Facebook poll of 144,000 people who voted on which specific chains to target. On the first boycott day, invoices dropped 44% and sales fell 53%. Over three weeks, retailers lost €108 million. [36] Kaufland cut prices on 1,000 products. The government expanded price caps from 30 to 70 essential items. [37] The boycott spread to 13 countries. North Macedonia saw a 46% revenue decline at major chains. We need to trigger the price war that the CEOs quoted above are afraid of.

Discuss product research with others. It helps us know what things actually cost before assuming their personalized advertised prices are the norm. See through the marketing to the manufacturing. See the problems a product solves, and the value of your purchase (to the company).

Be honest with yourself about your financial position. Even if you can afford something, do you truly need it? Is the markup fair? Does it anger you to know that you could solve this problem cheaper? Do you feel reward from saving money by avoiding cost? Evaluate older alternatives. See the value in restoring something versus buying new. Foresee the equalization of the market through falling prices because you personally refused to partake in these profit-motivated price hikes. Once you see the markup, you should be more proactive about identifying fair value. Train yourself to avoid luxury brands when the product is roughly the same. Here are a few common examples of product markups, use these as reminders when shopping to look for more reasonable prices.

• Mainstream automobiles cost roughly $16K-$25K to produce, but sell for $48K-$50K. 2-3x markup before the dealer adds another 10%. [38]
• Appliances have a 95-100% manufacture-to-retail margin. [39]
• Furniture carries a 42-43% markup on average, up to 50% at the major chains. Only the sale prices ever make sense to consider. [39]
• Clothing has a 150-250% markup. [39]
• Mattress manufacturers give the same mattress different names at different retailers, so you can’t comparison shop. Markups routinely run into the hundreds of percent.

We live at a time where obvious oligopolies with concentrated market power are using supply constraints (real or manufactured) as a trigger to increase margin, and never lower it. This is a systematic and coordinated attack on the consumers of the United States by companies that identified the mechanism and prioritize their stock value. They can do this because they think you have no choice. Show them you do.

References

1. Credit card debt hit $1.28 trillion. Yahoo Finance, 2026. Accessed 2026-08-16.

2. Prices, Profits, and Power: An Analysis of 2021 Firm-Level Markups. Mike Konczal and Niko Lusiani, Roosevelt Institute, 2022-06. Accessed 2026-08-16.

3. The Record Divide Between Corporate Profits and Worker Pay. Edward Conard Macro Roundup, 2026. Accessed 2026-08-16.

4. Inflation Revelation: How Outsized Corporate Profits Drive Rising Costs. Groundwork Collaborative, 2024-01-17. Accessed 2026-08-16.

5. Grocery prices went up like rockets and are coming down like feathers. Fortune, 2026-07-25. Accessed 2026-08-16.

6. Earnings Insight: Q2 2026. John Butters, FactSet Research Systems, 2026-07-31. Accessed 2026-08-16.

7. Productivity and Costs, Second Quarter 2026. U.S. Bureau of Labor Statistics, 2026-08. Accessed 2026-08-16.

8. 401(k) hardship withdrawals hit a record. Axios, 2026-03-04. Accessed 2026-08-16.

9. As inflation falls, corporate America won’t rush to pay the price. Eric Rosenbaum, CNBC, 2023-12-15. Accessed 2026-08-16.

10. Corporate profits were already at historic highs. They shot even higher in Q1. Yahoo Finance, reporting Bureau of Economic Analysis data, 2026-05-28. Accessed 2026-08-16.

11. It’s Not ‘Inflation’ — We’re Just Getting Ripped Off. Here’s Proof.. Inequality.org, 2024. Accessed 2026-08-16.

12. Some economists say corporate greed is the real culprit even as companies blame inflation for higher costs. NBC 6 South Florida, 2022. Accessed 2026-08-16.

13. Big corporations are choosing to keep prices high for consumers. Lindsay Owens, Groundwork Collaborative / Boston Globe, 2022. Accessed 2026-08-16.

14. How Corporate ‘Greedflation’ Contributes To Higher Consumer Costs And Job Losses. Jack Kelly, Forbes, 2023-08-10. Accessed 2026-08-16.

15. What’s driving the volume sales decline in the US?. NielsenIQ, 2023. Accessed 2026-08-16.

16. Albertsons Stock Is Plunging After the Grocery Giant Slashed Its Outlook. Yahoo Finance, 2026-07. Accessed 2026-08-16.

17. What’s Hurting BJ Stock? Wall Street Points To Gas Costs, Margin Squeeze, Weak Consumer. Yahoo Finance, 2026-05. Accessed 2026-08-16.

18. LCD Price-Fixing Conspiracy. Federal Bureau of Investigation. Accessed 2026-08-16.

19. Sticker Shock: Guilty Pleas Show High Cost of Price Fixing in Auto Industry. Federal Bureau of Investigation. Accessed 2026-08-16.

20. Lawsuit by 44 States Accuses Pharma Giants of Multi-Year Conspiracy to Hike Drug Prices. Common Dreams, 2019-05-12. Accessed 2026-08-16.

21. Samsung Agrees to Plead Guilty and to Pay $300 Million Criminal Fine for Role in Price Fixing Conspiracy. U.S. Department of Justice, 2005-10-13. Accessed 2026-08-16.

22. 21 Airlines Fined in Price-Fixing Scheme. NBC News. Accessed 2026-08-16.

23. Lithium-Ion Batteries Antitrust Litigation. Hagens Berman Sobol Shapiro LLP. Accessed 2026-08-16.

24. The Secret Plot to Raise Meat Prices. Jacobin, 2025-12. Accessed 2026-08-16.

25. Egg producers settle price inflation probe for $3.3 million. CNBC, 2026-06-30. Accessed 2026-08-16.

26. DOJ Backs Tenants in Price-Fixing Case Against Big Landlords and Real Estate Tech. ProPublica. Accessed 2026-08-16.

27. Samsung, SK hynix, and Micron sued over alleged DRAM price fixing amid record memory costs. Luke James, Tom’s Hardware, 2026-06. Accessed 2026-08-16.

28. Supreme Court strikes down tariffs. SCOTUSblog, 2026-02-20. Learning Resources, Inc. v. Trump. Accessed 2026-08-16.

29. Refunds for Thee, Not for Me: CEOs Reveal How Businesses Are Cashing Refund Checks for Tariffs Paid by Consumers. Groundwork Collaborative, 2026. Accessed 2026-08-16.

30. Trump admin refunds $100 billion in ‘liberation day’ tariffs. CNBC, 2026-08-05. Accessed 2026-08-16.

31. Some CEOs are receiving millions in bonuses after tariff costs were ‘neutralized’ — consumers get nothing. Yahoo Finance, 2026. Accessed 2026-08-16.

32. P&G earnings top estimates as price hikes offset rising costs, company raises 2022 sales forecast. CNBC, 2022-01-19. Accessed 2026-08-16.

33. The Consumer Sentiment Disconnect From Economic Reality. Real Investment Advice, 2026. Accessed 2026-08-16.

34. Builders slash prices to move homes; June sales edge higher. Briefs, 2026. Accessed 2026-08-16.

35. The Average Age Of Vehicles In The US Is Higher Than You Might Think. Carscoops, 2025-05. Accessed 2026-08-16.

36. Croatian Boycott Costs Retail Chains €80 Million as Protests Spread Across the Balkans. Novinite, 2025. Accessed 2026-08-16.

37. People Power: Croatian shop boycott leads to chains announcing price cuts. Croatia Week, 2025. Accessed 2026-08-16.

38. How Much Does a Car Cost to Manufacture?. Sohoify. Accessed 2026-08-16.

39. Cheat Sheet: Retail Markup on Common Items. Wise Bread. Accessed 2026-08-16.