What P&G Said about Soaring Costs, Supply Chain Woes, Inflation, and Trying to Keep Shelves Stocked

Profit fell despite price increases, more price increases coming to a shelf near you. “We do not anticipate any easing of costs.”

By Wolf Richter for WOLF STREET.

Procter & Gamble [PG], which makes a broad range of consumer and health-care products, released its quarterly earnings today. Let me give you the short form: Sales up some, costs up a whole bunch, profits down.

The company said it would implement more price increases to deal with rising costs. In its outlook, it upped the hit to earnings per share from surging commodities costs and transportation woes.

CFO Andre Schulten explained how the company had to jump through hoops, trying to keep the shelves stocked, including by limiting how much some retailers can buy to prevent hoarding. He complained about driver shortages. “We do not anticipate any easing of costs,” he said.

In April, P&G announced the first batch of price increases “in the range of mid to high single-digits,” on baby care, feminine care, and adult incontinence products, to respond to surging commodity costs and transportation costs. Later, it announced price increases on its family care, home care, and fabric care products. Over the past few weeks, it announced to US retailers price increases on its grooming, skin care, and oral care products. It has been a flow of price increases.

“The degree of timing of these moves are very specific to the category, brand, and sometimes the product form within a brand,” Schulten told analysts at the conference call this morning.

The first price increases started to show up on the shelves in September, and were barely reflected in Q1 ended September 30.

So, for the quarter ended September 30 (Q1 of its fiscal year 2022), P&G reported this morning, compared to Q1 a year ago, in a demonstration of how inflation bites (bold):

  • Sales: +5%
  • Costs of products sold: +13%
  • So, gross profit: -2%
  • Selling and admin expenses: +1%
  • Operating income: -5%
  • But interest expenses fell and income taxes fell
  • Net earnings: -4%.

That 5% sales increase was a result of, well, mostly unrelated to selling more:

  • Actual increase in volume: +2%
  • Foreign exchange: +1%
  • Price increases, which just started taking effect in September: +1%
  • Change in mix to costlier and premium products and to the Health Care business: +1%.

Gross margin fell by a bunch. The 13% jump in costs of products sold was primarily due to surging commodity costs, transportation costs, and “product and packaging investments.”

This jump in costs ate into its gross profit, and slashed its fiscal Q1 gross margin by 3.7 percentage points year-over-year, to 49.0% (= $9.97 billion in gross profit divided by $20.34 billion in sales), from its year-ago gross margin of 52.7%.

In its outlook, P&G said that the “headwinds” from higher commodity costs and transportation costs would increase by $2.3 billion after taxes for the fiscal year 2022, up from its July estimate of an increase of $1.9 billion. The increase in commodity and transportation costs would lower its EPS for fiscal 2022 by $0.90 per share.

Price increases are going to be “a larger contributor to sales growth in coming quarters” as they become effective in the market, Schulten told analysts today.

But at what point amid these price increases are consumers going to buy less? At what point will demand get hit by these price increases?

“As this pricing reaches store shelves, we’ll be closely monitoring consumption trends,” Schulten told analysts. “Very early to read anything in terms of price elasticity. I will tell you for those price increases that have gone into the market in the U.S, most of them became effective middle of September, and we have not seen any material reaction from consumers in terms of volume offtake. So that makes us feel good about our relative position.”

Those price increases are intended to offset costs associated with commodities, supply chain woes, and transportation problems.

“In terms of supply chain dynamics, certainly demand and supply have not balanced globally as we can see,” Schulten told analysts. “We continue to see pressure on transportation and warehousing. We continue to see driver shortages, diesel increases. And as I mentioned before, across our commodity classes, whether it’s chemicals, resins, packaging, or pulp.”

“We do not anticipate any easing of costs,” Schulten told the Wall Street Journal in an interview. “We continue to see increases week after week, though at a slower pace.”

The company has to spend more to keep shelves stocked amid the supply chain and transportation chaos. “To the consumer, it looks like we’re in good supply,” Schulten said. But ensure sufficient stock of products, as consumers increasingly encounter thinly stocked shelves and shortages, the company is spending more, he said. It is enlisting backup suppliers, changing shipping routes to get around bottlenecks, reformulating products, and in some cases limiting how much any one retailer can buy at a time to avoid stockpiling, he said.

Holiday selling season is going to be a mess: Look not for what you want but for what the store has. Read... Not Getting Better: Relentless Retail Inventory Squeeze amid Shortages & Supply Chain Chaos

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  152 comments for “What P&G Said about Soaring Costs, Supply Chain Woes, Inflation, and Trying to Keep Shelves Stocked

  1. BuyHighSellLow says:

    “Nothing’s gotta give” popped into my consciousness.

    If used in the place of “something’s gotta give,” the world starts to make a lot more sense.

  2. Bead says:

    Stonks are going up faster. We’re almost back to the tippy top! There is no alternative.

    • Depth Charge says:

      When you hand out trillions and you encourage gambling, that’s what you get.

      • Mira says:

        It seems to me that the hand out is here to stay ..
        Have U had your double jab yet & now the booster is coming
        Thank you God for the free money printer.
        Oh, gosh, another booster required ??
        & FIDO too🐶 ??
        “Keep printing love .. we have a long way to go yet.”
        I don’t get it .. how is it that the free money is not subsidising all of the above also .. after all it’s all been caused by that unstoppable virus ??🤔

    • RightNYer says:

      It’s very dangerous when people buy stocks as collectibles, not for their earnings.

    • Old School says:

      Someone said profit margins are the most mean reverting statistic in finance. Corporations had a lot of fat years. Average profit margins can get cut in half which makes the E and the price people are willing to pay for E go down. That’s how you get single digit PEs. Inflation is a good start to it.

      • Wisdom Seeker says:

        Re “profit margins are the most mean reverting statistic in finance”

        That’s only true in a competitive economy, where high profit margins attract competitors.

        In a feudal, monopolistic, oligopoly, totalitarian or fascist system, profit margins don’t have to mean revert.

        • Old School says:

          Maybe. Corporations got used to treating people like sheet because of excess labor in China and flow of cheap labor from the south. Now that they need people to work, some say its better just to enjoy being in the wagon, than pulling it.

      • sunny129 says:

        Who cares about earnings? really?

        50% of rise in S&P since ’09 came from ‘Buy-back shares program’ which got accelerated with zrp/nrp rates to borrow! They are issuing Corp bonds and invest back in their equity!? Release the RESERVE (held back for some potential risk) periodically and boost earnings like JPM did recently!

  3. Depth Charge says:

    We are now reaping the “benefits” of .gov and the FED’s grotesquely irresponsible money-printing scam. Do you think the crackpipe crowd who believe in MMT have learned anything yet?

    • wisoot says:

      Do they think people will take it lying down.

      Hey bill yes warren dya think we did enough to divert their attention from our mirage of MMT we did our dammedest didnt we george.

    • Thomas Pained says:

      I support Depth Charges’s cynical responses! Everyone of them! To the issue of stock buy backs; that used to be illegal until Bill Clinton made it legal. As a Goonie, “I have a baaaaad feeling about this!”

      There is absolutely no doubt that the stock market is a complete fabrication. It’s a machine to suck wealth out of the middle class into the coffers of the wealthy.

      • Wolf Richter says:

        Thomas Pained,

        “To the issue of stock buy backs; that used to be illegal until Bill Clinton made it legal.”

        Sheesh!!!!!

        Here is reality: Buybacks were made legal in 1982 during the early period of the REAGAN administration, when the SEC adopted Rule 10B-18 (the safe-harbor provision)…

  4. polecat says:

    Well, be consoled that ‘$tockTradinJeff’ won’t have to Depend on incontinence products for HIS wealth .. oops, I mean ‘health’ needs ..

    No inflation of leaky fluidity where HE’$ concerned.

  5. Petunia says:

    This comment is not about P&G specifically, it is about American toiletries/cleaners in general. I always bought discounted supermarket/drugstore toiletries until a couple of years ago. The quality of the soaps and cleaners I was buying got really bad, they no longer cleaned anything. Buying more expensive products didn’t help.

    Now for soaps or facial cleansers I buy foreign whenever I can, they work. Detergents I buy as cheaply as possible, because more expensive is not better.

    • Anthony A. says:

      Try making your own bar soap. It’s a fun and inexpensive hobby. There is lots of info on how to do this on the ‘net.

      • JoAnn Leichliter says:

        Rendered hog fat and lye and… Well, my mom did it, but she never thought of it as fun.

        • polecat says:

          Shouldn’t that be Bankster Phat in lue of the hog renderins proffered .. or is THAT too odorous to even consider??

          just asking..

    • COWG says:

      I only use 2 of P&G products (Gain and Dawn)… which I only need to buy a few times a year…

      Even a10% price hike might mean 4-5 dollars a year for me… not worth worrying over…

      Truthfully, I could be a little more efficient with my usage and make even that moot…

      • Wisdom Seeker says:

        Don’t forget that Every Other Household Product Producer is in the same pickle as P&G. They just haven’t all had to come out and confess in their earnings reports yet.

        Petunia: As the CCO (“Chief Cleaning Officer”) here at Wisdom Seeker Inc., I can vouch personally that Palmolive, 409 and Windex still work great. Some of the newer brands may have gone a little too “green” in terms of sacrificing performance to save profits public relations whatever.

        • Petunia says:

          My two biggest complaints were soaps that don’t clean and toilet cleaners that don’t work. Buying soaps from Europe or Asia whenever I can and using ammonia for everything else, at least it smells clean.

        • Wisdom Seeker says:

          I think Clorox Toilet Bowl still works too.

          One valuable thing I learned from the pandemic was how to use basic bleach to make disinfecting cleaning spray. The instructions are even on the package (for Clorox bleach anyway).

          I wonder if there’s a way to do something similar for toilet bowl cleaner.

          The active ingredients in a lot of these household cleaners aren’t that hard to reproduce at home.

        • Crunchy says:

          Gosh, just pour a cup of bleach in the bowl, close the lid, and let sit for an hour or two. Works wonders and doesn’t even require gloves.

        • HollywoodDog says:

          This conversation is clearly circling the drain…

        • RedRaider says:

          You people are starting to sound like you’re in a depression.
          Extract maximum utility out of everything before you throw away or you don’t survive.

          I know it’s depressing, but I’m proud of you.

  6. davie says:

    Hmmm.
    Maybe, the transition is the transition out of the public health crisis.
    And when the public health crisis is under control, the transitory inflation will stop.
    Maybe it won’t stop because some folks just don’t care to cooperate.
    Hmmmm.

  7. Nemo 300 BLK says:

    Price increases and inflation are a sign of the times, so I don’t blame P&G one bit. I’m a US manufacturer who has passed on three 5% price increases to my retailers in 2021, with a 5-10% increase coming in January.

    If oil hits $150-200 / barrel in 2022 like Wall St is heavily betting on, there will be even more price increases in 2022.

    • Depth Charge says:

      I hope you are planning on reduced sales, because that’s exactly what’s coming.

      • RightNYer says:

        I can’t for the life of me understand how “investors” are so excited about the “great profits “when they’re clearly driven by stimulus that looks unlikely to be repeated.

        • Nathan Dumbrowski says:

          The cause for the next stimulus will be to counteract the excessive price increases. Duh. This is totally the next reason to simulate the economy when it will in turn just lead to a hide and seek at the register

    • The Real Tony says:

      As the last baby boomer retired we were supposed to get deflation like Japan not inflation. The Fed saw this coming and manipulated everything so the opposite happened and we got inflation.

      • Wisdom Seeker says:

        Tony: the 20- and 30-somethings from the “Echo Boom” are a bigger generation than Baby Boom was. They are inheriting from the boomers and borrowing like crazy to start their homes and start families… the high-consumption years. Toss in immigration-driven population growth and there’s a lot of demographic tailwind for inflation.

        • Harvey Mushman says:

          There are still many boomers in the workforce. I’m a boomer, born in 1963 and still have another 8 years of working unless something ends my career prematurely.

    • Old School says:

      Yep. I hate it that government creates inflation, but businesses have to do the dirty work of raising prices.

      Saw an interesting interview with a guy with a master’s degree living in Lebanon as the currency failed. Pretty interesting how people including him got caught with money in the bank. Banks and ATMs we’re closed for 3 weeks and then your money was devalued and metered out to you if you submitted enough paperwork from beaurocrats even for $80.

  8. Yamo says:

    US has become a number manipulation to keep being #1, or they think are #1. Manipulation via inflation & stock markets increase are the new norm, where they invest in new printings USD to pump their stocks of corporations, so they say are #1.
    I call it BS

  9. JoAnn Leichliter says:

    How interesting that no one is talking about the most serious impediment to the moving of material out of California, a root cause of the “shortages.” Under California law, only trucks that conform to its essentially impossible emissions standards can operate inside California. Hence, over half of the current truck fleet cannot operate in California. Even if they unloaded all of the cargo ships, goods would just sit (who knows where).

    Some companies have been trying various remediation strategies, but of course those add to the cost of goods as well.

    • Anthony A. says:

      This subject was posted by a reader here in detail in a previous topic put up by Wolf within the last week. But yes, the trucks have to meet the current Cali regs.

    • Don says:

      So, you have a choice between breathing clean or getting that PS5 for Christmas. Believe it or not, some people would pick the clean air.

    • misc.etc says:

      @JoAnn Leichliter
      Finally, someone has said it! I’ve read that article, too. It’s not dissimilar to what’s happening in the UK. They have a massive backlog of heavy goods vehicle driver’s licenses pending approval because of government bs. Hence shortages of everything because of no drivers.
      You would almost think that it was intentional.

      • Sams says:

        Crappy pay, bad working conditions, there is a truck driver shortage all over EU. Even after a lot turned away from Britain and headed towards the continent.

        The wound is self-inflected by those that pushed the wages that low that anyone that can get a better job do something else. Capitalism at work, price, supply and demand must meet.

    • Ron says:

      Then why are railroads allowed to operate huge Diesel engines but probably don’t cause pollution or there bigger than government

    • Wolf Richter says:

      Railroads were among the biggest issues in getting containers from the Port of LA to the rest of the country as they stopped taking containers to their rail yards in Chicago, Memphis, etc. because they were totally backed up at those rail yards.

      When someone writes some silly piece about emission requirements that have been in place for a while, then the whole internet lights up and uses that one article to justify everything. Gets kinda tiring after a while. If Nebraska doesn’t like the way California handles things, it should build its own port, hahahaha.

      And why is the container terminal at the Port of Houston complaining about a shortage of “chassis”? There are issues everywhere.

      LA doesn’t have the only container terminal in the US. There are containers terminals in Texas, Louisiana, Florida, and all the way up the Atlantic Coast. The Panama Canal is open for business.

      • Wisdom Seeker says:

        Most of the major Midwest cities were founded in the 1800s as shipping hubs for river freight.

        Nebraska, Iowa, Minnesota, Ohio, Indiana… can evade the West Coast bottlenecks by shipping their imports by barge up the Mississippi / Missouri / Ohio (again).

        Unless you’re in a hurry, water beats rail beats truck beats air.

        • Seneca's Cliff says:

          Another problem is that they used to move a fair amount of cargo via the Port of Portland. But the latest generation of container ships got too big too go up the channel in the Columbia and the. Willamette, so pretty much just grain moves through here now, and few ROLO car carriers from Japan. Another self inflicted injury consolidating all the freight in a few ports.

      • MCH says:

        Is it more or less expensive to go through the Panama canal from Asia and then go north or through the west coast, and then go by rail or road to final destination? (if one assumes the final destination is in the middle of America?)

        Also, where is a majority of the cargo landing in the west coast going to?

        • Wolf Richter says:

          1. It’s a lot slower.

          2. Some of it stays west of the Rockies. Much of it goes to the rest of the country.

        • MCH says:

          The boat part of it is certainly slower, by virtue of distance. I’m curious though if logistical experts made any calculations on costs and time given the current situation on west coast ports.

      • David W Young says:

        There is a major port in Baltimore, MD, which had to be used instead of Long Beach, CA in 2002 for the landing of my new 2003 Forester that had frequent sailing miles upon arrival since it went thru the Panama Canal to get to Baltimore. Long Beach was closed because of a longshoremen strike, so we better not beat these dock workers up too much this time, or there is going to be widespread strikes as these workers start falling asleep running the cranes and such.

  10. Timothy J McLean says:

    My guess is many consumers will pass over the higher priced P&G products in favor of lower priced buying store brands. I am fine choosing Kirkland’s washing detergent over Tide.

    • VoltaMom says:

      Sooner or later Costco is going to have the same supply/cost/transport problems that PG currently has. Stock up now, regardless of the brand, I would say.

    • MarMar says:

      This is why P&G is so concerned about making sure their products are always on the shelves – they don’t want people who automatically buy the same products over and over again trying a new brand out of necessity, and then maybe finding out that they like it.

      • wisoot says:

        Advert programming channel options dwindling and there is simply no fix. People choose what they view, when, volume up or off, get ready local suppliers in local markets. Some consumables will shift. Circular economy entrepreneurs go!

      • COWG says:

        And why they are all over the media selling their price increases…

        • Wolf Richter says:

          Trying to get their competitors to also increase their prices! That’s how that game works. Airlines… everyone does that. It’s illegal for one CFO to email the other CFO to collude on price increases, but it’s not illegal to do the same via the media.

    • curlydan says:

      In my many years of doing pricing tests, I’ve learned that most consumers are price inelastic, i.e. the % price increase is usually more than the resulting % quantity decrease–so companies can squeak out more revenue with a price increase.

      But raising prices is a hard habit to break once it gets started, especially if you’re trying to hit an EPS target that keeps going up as well.

      • Petunia says:

        Supermarkets are now giving discount only if you buy multiples. Passed on the potato chips this trip, don’t need 3 bags.

    • Depth Charge says:

      Last time at the store I was looking for Palmolive dish soap, but the shelf was empty of the green stuff I normally keep on hand. As I was considering alternatives, I noticed a giant bottle of “Signature” brand dish soap at a really inexpensive price. I decided to try it out. It works just as good as Palmolive at 1/3 of the price. I’m sold. I’ll never buy the name brand stuff again.

    • Truckman says:

      Basic chemistry and economics.
      The cheaper products have less active ingredients than Tide, but if you get the cheaper ones at door crasher prices, then you get up to 80% more active ingredients/$ vs Tide on discount. Just put more into a washload.

  11. Supermarkets like Albertsons have moved to their own (Signature) brands (they beat earnings). Just not sure how this works, do they have the same suppliers maybe even share the same processing plants? P&G will lose some market share. One thing about the store brands the stores seem to have more flexibility in markdowns and inventory. Interesting that during this round of supply chain disruptions none of the items that went missing during the Covid lockdown are in short supply. PG is the largest manu of TP worldwide.

  12. gorbachev says:

    Inflation hasn’t really hit until recently. Up at the cabin, we needed a few sticks of good dry wood.
    Went to my local and holly smokes had to pay a dollar a stick.
    Next year cords only.

  13. Bobber says:

    I sense a lot of people are getting priced out of the economy. They are choosing to go off-grid and become more independent in terms of food, clothing, and shelter. This seems to be supported by the number of people exiting the workforce. The Fed says most of them come from rural areas, where it is easier to subsist on low income or no income. An underground trading economy of sorts could be developing, with less W-2 income and more unreported cash transactions.

    That also explains the outcry over the proposed $600 reporting limit on bank account transactions. Lots of people are likely under-reporting their taxable income these days. Can you blame them, when mega-corporations and hedge funds are allowed to pay tax at half the statutory legal rate without penalty, all in plain sight? Perhaps the Congress should show progress on tackling the biggest violators first, regardless of campaign contributions. Failure to close the carried interest loophole is a joke.

    • Depth Charge says:

      As an outdoorsy person, I have never seen so many people living in their cars, vans and RVs out in forests and dirt roads that lead to the wilderness. They are everywhere. It’s sad, but at the same time also more dangerous because a lot of the undesirables are out there, having no other place to live. I am always armed when I am out hiking now.

      • COWG says:

        DC,

        Better to have it and not need it…

        Although you need to think outside the box…

        Carry a carton of cigarettes, a six pack and a pistol…. One of the three WILL work…

      • Motorcycle Guy says:

        Depth Charge,

        I will tell you of my experience of the past 5 years or so. Back in 2015 I purchased a Nissan NV2500 HD step up truck. The truck fit a queen sized bed very comfortably and I had a 49″ LG TV hanging from the roof. I spent my summers in the Delaware Valley of Pennsylvania and (if I was still in the USA) my winters were spent in So. Florida.
        I would park overnight in the parking lot outside of a Panera Bread restaurant and never was bothered by anyone. I’ve recently left the USA and am enjoying life in a country near the Equator.

    • Augustus Frost says:

      Increasing or collecting more taxes from one group never means anyone else pays less. It is never a zero sum game, but a negative sum game in which everyone pays more.

      Corporations do not pay taxes. Their shareholders, employees, and customers do.

      The rich are paying far more than their “fair share”. Top 1% already pays 40% of income taxes. Most of the them (all but the very top earners) pay far more than they will ever receive back even if measured by all taxes paid. Extortion payments disguised as taxes to keep the mob from storming the gates is exactly that, a shakedown protection racket. Better to leave the country and take your money except Americans can’t even do that anymore. The US has the most predatory soak the rich tax system where you can’t even get rid of your citizenship to make a clean break.

      My brother has dual US-Canadian citizenship. I told him specifically not to register his daughter’s births in the US. The two of them can decide later whether they want a US passport. It might be worthwhile if they decide to work, live, and marry here but not otherwise, as it isn’t better than Canadian.

      Not what many or most Americans want to hear but so what.

      • Confused says:

        “The Top 1% already pays 40% of income taxes.”

        What is the Top 1%’s share of taxable income? How much has their not-yet-taxed wealth increased? A dollar of tax deferred for 20 years isn’t worth a nickel.

      • Bobber says:

        You say corporations don’t absorb the cost of corporate tax increases?

        I wonder why they argue so vehemently against corporate tax increases? Why do they pay hundreds of millions to lobbyists to reduce taxes?

        Based on their actions, I think the corporations might disagree with you.

        • monday1929 says:

          Nicely put. And isn’t it so kind of the Wealthy to want to keep the minimum wage low in order to keep the poor employed?

      • Hargraves says:

        So, why if they pay no taxes do they have the rights of taxpaying human citizens?

        No representation without taxation!

    • Swamp Creature says:

      The $600 limit is a joke. In reality, the IRS will be downloading your entire monthly bank statement. A 3rd grader could figure out how much income you made. The only way around this is not to deposit checks you receive for your services. Just cash the check at another bank. People are probably already doing this in anticipation of the new regulation which is still in the reconciliation bill. My old man once told me that people all over NYC metro area did that all the time and didn’t bat an eyelash.

      • Old School says:

        I suspect we are going to get cattle herded into crypto where every transaction is illegal unless done on the Blockchain. Not sure what that will do to precious metals as maybe that will allow you to still be off the radar for some transactions or if it will be much more difficult to transact.

        Central bankers don’t like citizens holding gold as it restrains their ability to print savings.

    • Swamp Creature says:

      Old News

      I heard today that they are now proposing to download everyone’s bank account with over 10K transactions for the year to the IRS supercomputers and do automatic audits. Next step is if you owe taxes they will take the money out of your bank account via electronic money transfer.

      If this bill passes a lot of people will be taking their money out of the bank, especially with the neglegable interest rates they offer. That will create bank runs.

  14. Brewski says:

    “Inflation is always and everywhere a monetary phenomenon.”

    Milton Friedman

    PS. “What fools these mortals be!”

    • Old School says:

      Even though he is not my favorite, I am going to laugh when Larry Summers tells the DC crowd I tried to tell you that you are dumping too much money in the economy. He says it’s simple arithmetic.

      • Depth Charge says:

        We’ve got Granny Yellen with her sickening smile, and Weimar Boy Powell, telling us that in the past they never printed enough, so it’s better to over do it this time. These people are deranged lunatics.

        • MCH says:

          Be respectful, one of the J team might be out on the streets by this time next year. We should all feel bad for JP. What would he do if he didn’t have a brilliant audience to dazzle using his superb vocabulary. Transitory, Transient, Temporary, words that have helped improve the quality of life across America.

        • Swamp Creature says:

          In the book “When Money Dies” the author describes how the country at that time (Germany post WWI) was ruled by 4 of the most loathsome figures ever to inhabit the planet earth. We know what happened as a result. I’m afraid we in the USA are ruled by people as bad if not worse.

    • Arnesto says:

      Perfidia by Phyllis Dillon.

  15. R2D2 says:

    You think the US is bad… Try the UK…

    Tracking the family’s bills, gasoline is up +40% since 2020, food is up +50%, electricity is up +70%.

    The daily cost of living is almost running out of control.

    • Depth Charge says:

      No worries, they’ve got a plan – more money printing. Because when inflation is out of control because of said money printing, more will fix it.

      • RightNYer says:

        These people are the definition of doubling down on stupid.

      • Swamp Creature says:

        The depute Treasury secretary was on TV the other day quoting the same Bull S$it that Dr Havenstein said back in 1923 when he was asked why he continued to print money when inflation was out of control in Weimer Germany. Dr Havenstein said back then that he did it so that people would have the money to pay for the higher prices. The Deputy Treasury Sec said the same very thing. These are the morons that are running our financial system.

      • Swamp Creature says:

        “Bottleneck” Biden will fix all of this.

    • Anthony A. says:

      Doesn’t the UK have a plan to construct more offshore windfarms?

      • R2D2 says:

        Yes, the UK has erected tens of thousands of windmills. It wants to be the Texas of wind power. This summer, 2021, the wind (literally) stopped blowing. The windmills stopped. Electricity wholesale pricing doubled, and then tripled.

        What’s more, a recent study showed 70-90% of the new windmill jobs went to China, where everything is designed or built. The remaining UK jobs were mostly screwing in some final bolts on-site, or sweeping up the dead birds around the base.

        • MCH says:

          Are you serious, there is a country that wants to be the Texas of something?

          But to your original point, oil prices going up are a good thing. Higher gas prices will wean people depending on ICE driven cars. You can switch over to more advanced EVs, and it just makes a whole lot of sense. Charging conveniently at home means you don’t have to go to the dirty dirty petro station. Imagine all the wind driven power that can be used to power your EVs.

          And I don’t know what you’re talking about sweeping up dead birds, if these windmills are off shore, the birds will feed fishes just fine. The circle of life, green energy is helping to promote that. There should be a ton of appreciation there.

          And do you guys really want low paying manufacturing work, or would you rather have wonderful service oriented export jobs. Remember, the UK needs to catch up to the US in that regards, our services exports has been a boon over the years. (well, ok, last year, not so much)

        • Auldyin says:

          @R2D2
          Boris is determined UK will be at the international forefront of going off the cliff.

        • Anthony A. says:

          MCH, the north wind is not blowing in the U.K. That’s good for the birds but not for the power outlets connected to the wind farms. And they are going to put up more? What?

        • R2D2 says:

          MCH…

          Our neighbour has an EV. It takes 36 hours to fill up by home plug. My petrol car takes 5 minutes.

          Green is good… until the wind stops. Like it did, this UK summer… And the windmills stop. And electricity prices rocket 100%. Factories shut down. Pensioners face a dilemma of heat or eat.

          Thousands of windmills kill millions of birds. They cannot hear or see the silent blades.

          Making a $100,000 wind turbine is a high-skill, high-wage job. Like making a $100,000 Tesla.

          In terms of service exports per head, the UK today outstrips the US by almost 3 times more!

        • Wolf Richter says:

          “Our neighbour has an EV. It takes 36 hours to fill up by home plug. My petrol car takes 5 minutes.”

          It takes 10 seconds to plug in the vehicle. That’s ALL you have to do. The charger on its own, while you sleep, takes a couple of hours to top off the battery every night after your 30-mile commute. Every morning, you’ve got a full battery.

          But YOU have to drive to the gas station (rush hour?), then fill it up, get your hands dirty, mess with a credit card, then drive on. My wife hates doing this. And it costs more.

          “In terms of service exports per head, the UK today outstrips the US by almost 3 times more!”

          Most of that is financial services from the City of London, such as money laundering, tax dodging, derivatives trading, clearing operations, and the like, hahahaha

        • MCH says:

          @Anthony

          Put up what? Well, if the wind is not blowing, there is always solar panels. :P

          Oh, and don’t forget, the Brits are still getting China to construct a nuclear power plant right? Or did that finally fall through?

        • Old School says:

          The people trying to sell you clean energy are the same ones that off shored US manufacturing to cheap Chinese labor and cheap Chinese dirty coal factories for 25 years. They also enjoy flying between continents on jets that get 2 mpg.

          Watch what they do, not what they say

        • Anthony A. says:

          MCH: You said: “Put up what? Well, if the wind is not blowing, there is always solar panels. :P”

          In The U.K., the sun only shines once in a while. Good luck with solar panels! Also, they do take up A LOT OF ROOM to get a lot of electrical energy and the U.K. is short of land in the right places. Maybe put them offshore where the silent windfarms are?

          The U.K.pissed away a lot of money building these silent windfarms…..let the eat coal! (or pay for natural gas).

  16. DR DOOM says:

    One thing for sure. This ain’t on Jerome’s reading list. Congress is getting pushed a little by the electorate. Some pain is felt, but not yet a narrative. It’s coming. Pain and more pain that becomes a political advantage will get served.

    • Old School says:

      Latest narrative I hear is current money printing is going to end when population is Fed up with inflation and cleans out current crowd from DC.

      • Anthony A. says:

        Cleaning out the DC crowd seems to be an ongoing theme these days. But when will the rousting party begin?

      • Wisdom Seeker says:

        We need a P&G product for Swamp Cleaning!!

        Be even better if Swamp Cleaning was available more than every 2 years…

      • Swamp Creature says:

        That’s what T was suppose do. “Drain the Swamp” . He didn’t drain anything. I ran into John Bolton the other day in the supermarket line. I was ready to unload on that SOB. But better judgement prevailed and I said nothing.

  17. MCH says:

    what hogwash… according to economists, they all project prices to be coming down next year.

    So, obviously, the CFO of P&G doesn’t know what he is talking about. Move on, everything is just fine. I’m honestly surprised that the analysts on the call aren’t challenging his narrative about prices increasing.

    :)

    • Augustus Frost says:

      Yes, I was equally surprised to read the above post with the reason many people are dropping out of the workforce.

      I also understood the decreased labor participation rate was due to the fantastic economy which made everyone so rich the last 20 years. I thought everything was better than ever.

      Then I see from the FRB’s own data that median income and net worth have essentially flatlined since 1999.

      • Bobber says:

        It’s a barbell economy, with rich and poor. The rich retire and become rent seekers. The poor get fed up and go off- grid. They are all leaving the formal work force, which is the obvious result of Fed policies that create massive wealth disparity.

        I know a guy that used to work in a factory and get a W-2. Now he buys and sells RV’s from his home. He’s fully off grid. He’s also planning to move to a lower cost area of the state.

        • Truckman says:

          The tax system used to get $38,000 a year from me, it now gets about $4,000.
          I still have the same standard of living (minus exotic holidays, but I’ve been everywhere exotic I want to go now), but I only work for myself 1,200 hours a year, versus 2,800 hours a year for an employer.
          And my skills are denied to society but available to myself.
          This is, literally, the collapse of civilization, since it is now longer worthwhile me specializing and paying other people else to do the other jobs. And I like doing my own renos and growing my own food, whereas my former careers have been changed from joy to drudgery by counterproductive government interference and management nastiness.

    • endeavor says:

      what hogwash… according to economists, they all project prices to be coming down next year.

      They may. Depends on what phase we are in of the bust out.

  18. John says:

    Wolf,
    Wow!!!!!!!!!!!

  19. polistra says:

    Inflation, like interest, is a natural feedback loop in real economics. High prices are NECESSARY to overcome the obstacles. High prices are NECESSARY to build new factories HERE and pay new workers HERE. After those investments and additions are done, there’s more WAGES available to pay the high prices, and the situation returns to stability.

    When central banks try to block feedback loops, the system collapses. Business has no motivation to build new factories. The only attractive option is to halt real production and stick with safe stock manipulation.

    We’ve been blocking ALL the feedback loops for 40 years, and the result is predictable.

    • Augustus Frost says:

      There is nothing “necessary” in inflation. Institutionalized inflation is legalized theft. It’s symptomatic of the incredibly dishonest society existing today where it’s considered “normal”.

      Prices were mostly stable (outside of wars (and similar events) prior to the FRB in the US and this lasted until WWII. Not much different in many other developed countries.

      “Growth” (including fake debt induced growth) has been more consistent since WWII and especially since the early 1990’s under Greenspan.

      But that’s not evidence of superior economic policy but “can kicking” where the distortions are piling up.

      There is a day of reckoning for American and developing country living standards and no gimmicks can avoid it permanently.

      • Wisdom Seeker says:

        Inflation, when it happens, reflects in part a generational Establishment getting its a$$ kicked by Reality.

        The 1970s were the demise of the postwar Establishment, led by the Greatest Generation from WW2. They couldn’t hold it together financially, went off the gold standard and had to inflate to avoid a massive default.

        Now we are seeing the demise of the Boomer Establishment. Unpayable debts can only be resolved through default or printing. They’ve chosen printing.

        (The 1929 crash was a generational transition under the gold standard – which made it deflationary since there was no way to paper over the bad debts.)

    • COWG says:

      p,

      Maybe yeah, maybe no…

      What is considered high prices are relative to income…

      The type of manufacturing I think you are referring to will not come back…ever…

      There has been a $hit ton of money available for investments and additions as you call it… as documented here a lot, the money was used for stock buybacks and other financial shenanigans…

      Any new manufacturing in the US will be highly automated and use very few employees…

      The only thing higher prices will accomplish is to bring a class war front and center…

      The class of people to whom higher prices is not a factor will be able to cherry-pick the assets of those that tried to play the game and lost…

      The Fed and corporate America have destroyed the middle class in the name of stocks and housing… only the haves and have nots now…

      Life will be pretty good for the haves… not so good for the have nots…

  20. josap says:

    It’s time to buy no extras and stock up a bit on day to day non-perishables. Trash bags and laundry soap. It’s all going to go a lot higher.

    Your savings account will be in your pantry. I remember the late 70s / early 80s all too well. It’s going to be harder this time on a fixed retirement income.

    • Calvin says:

      We already did all that at the end of the Trump economy.

      Everything we might need to buy in the Biden interregnum, is already sitting in our basement.
      We spend hardly anything now and that’s all in cash.

      You’ve heard of the BDS boycott movement?
      “Biden?, Don’t Spend”

  21. Brant Lee says:

    What Mr Schulten doesn’t mention and cannot mention is the constant squeeze for more profit from so few corporate monopoly retailers remaining, namely Walmart. I wouldn’t think P&G, and others like, to ever show much profit. Shelf space, shelf position, displays are up to the highest bidder. Not to say constant badgering to bring down the product cost in any way possible, which means the consumer gets less for the same price or more.

    About five years the height of toilet paper shrank just a tad to satisfy retailers’ demand for lower costs. I noticed the EZ open bags on dog food were eliminated knowing full well the reduced cost was going to Walmart.

    We’re doomed, corporations will never leave anything alone, forever looking for increased profit. Products, services, employees, expect forever less at higher prices. This all started long before covid but is now going into overdrive.

  22. David W Young says:

    Memo to Wall Street: Surging inflation not good for corporate profits, even for commodities producers. Plus, the Fed’s punchbowl is being pulled away and just when the revelers were getting stinky drunk. Start worrying about the Return OF your Principal, and not about the Return ON your Principal. Last one to leave a slushed party usually gets one heck of a Hangover.

  23. fred flintstone says:

    As the pie available starts to shrink……the generational war starts……low interest rates were the first strike on the old. The next big hit will be the war over whether social security gets funded. Medicare hits earlier and will be interesting how they explain the big cut in benefits. Whether the millennials put up with 3% pay increases in spite of 6% inflation will decide whether violence will break out.

  24. historicus says:

    Everyone knows inflation is not transitory

    Everyone knows the Fed is not gonna fight it

    Everybody is reaching for everything they can get their hands on

    Holding money is a 5.8% a year is a loser

    This is all by design and everyone is starting to realize it

    By who’s design?
    Answer anyone?

    • Swamp Creature says:

      historicus

      Part of the plan is to under report inflation. Inflation is 20% right now. You’re losing a lot more than 5.8%. This is confiscation of the savings of the American people via inflation, so as to pay all the deficit spending by the government, and so they can continue to promise goodies, without raising taxes as much as they would have to. To avoid this you have to jump into the casino which is the stock market and risk losing everything.

  25. Javert Chip says:

    Holy Crap! This inflation does not look “transitory”.

    Somebody ought to wake up Joe (or Brandon) and let him know before it’s too late!

    Oooops…it’s already too late.

    • Old School says:

      I remember when inflation was the biggest problem the country had. Full circle in 50 years. At least I lived to see a round trip.

      Anybody remember the book Run Rabbit Run about a guy living in the seventies. I think he was a car salesman trying to live the upper middle class life I remember that he was buying gold at some point. Might have to read again to see how the world has changed

  26. LM says:

    After 18 months of idiocy, I’m exhausted. How did my French grandmother survive WWI (as a little girl) and WWII (as a young mother) in France, I’ll never know. She was brave and vulnerable, courageous and afraid, a devout Catholic, and thinking France would never recover, and a war widow, remarried and came to America. She survived without P&G crap and a whole lot more.

    • josap says:

      People made do or did without. They grew food, sewed patches on clothes, or turned the rags into quilts.

      There was no plastic. No paper towels. No spray-on cleaners or foaming bubbles. We have so much now, we will miss more things.

      • wisoot says:

        Sewers are looking forward to less chemicals- so are the fish . Nature revolution.

      • Old School says:

        I always say we are mammals so we actually need very little to survive, but to live we need a lot.

        If you are in to how little you need, watch some of the bush crafters that take as little as 5 things with them in the woods and try to survive.

  27. LM says:

    PS No doubt those WWs affected global supply and demand, and even provincial supply and demand, and let’s remember the Spanish flu (pre-PC nomenclature) was the chaser on WWI.

  28. DawnsEarlyLight says:

    No tears here. CYA

  29. DawnsEarlyLight says:

    BTW, treasuries up/down by hundredths of a percent. The Corporations can KMA.

  30. Jack says:

    All those stimmies will be paid back 10 fold eventually. This is the understatement of no such thing as a free lunch. Prices up across the board not just p&g. Everyone except for the top 10% is going to feel this in a big way. Fed wanted inflation. They got it in spades. Only way out are big rate hikes which are never going to come cause no one has the stomach for it.

    • Old School says:

      We are debt saturated. We got a boost in living standards living beyond our means for 50 years. The rich are hoping to get richer by going carbon neutral, but a lower standard of living is going to be tough for the masses to accept.

  31. Depth Charge says:

    Given the hyperinflation in new truck prices – and used for that matter – my plan is to never buy another truck again and just use mine as little as possible, with the intention it will last me until either I die or am so old I don’t need it anymore. I figure I can cut the use down to about 3,000 miles per year. This has the added benefit of reducing my fuel consumption in a time of rapidly increasing fuel prices.

    I’ve also been rethinking what equipment, and am considering selling off some of it give that I can get a higher price used than I paid new. This is stuff that I only use periodically and can do without. It would slightly limit me in what jobs I could complete, but I could honestly rent some of it if I needed to. I may just forego those jobs altogether, because they’re not my bread and butter anyway.

    My point is that this horrendous inflation is making me sharpen my pencil and re-prioritize. I also limited my price hikes this season because I have many repeat clients who I didn’t want to “stick it to,” but next year I will have to. Some of my bids will go up 50%. I plan on losing some business, but I’ve had to turn so much away this year as it is, that I will make more money anyway.

    I seriously doubt I’m the only person engaging in these thought exercises. When everything goes up as much as it has, only the truly wealthy are unaffected.

    • Swamp Creature says:

      Depth Charge

      You think you got it bad. We’re under WAGE CONTROLS! We cannot raise our prices because the government won’t let us. After expenses we’re lucky to making what a clerk at McDonalds makes. As JFK once said “Life is not always fair”

      • BuySome says:

        If he were alive today, it would go “Ask not what you can do to screw your country, ask what your country can do to screw you.”. Might then be saying we’ve been JFKed, as in Just F**Ked.

    • Cookdoggie says:

      “Some of my bids will go up 50%. I plan on losing some business, but I’ve had to turn so much away this year as it is, that I will make more money anyway.”

      DC, sounds like you and the auto makers have the same plan.

  32. 2BFrank says:

    About every 80 years the current bunch of phycos in charge, the deep state, Davos et al make a total pig’s ear of everything, it has been happening since the first humans and will happen until maybe AI or Skynet replace humans, there is nothing anyone can do to stop it, there just is no cure for it, none has ever been found in all of human history, depressing but true.

  33. The wealth effect is a Ponzi scheme says:

    S&P 500 will hit 5000 February 14th 2022.

    • Old School says:

      That’s about 4000 too high, but it is what it is til interest rates rise.

  34. 2BFrank says:

    i passed my Heavy Goods Vehicle license class 1some 40 years ago, I never drove goods for a living but I was a HGV recovery truck driver as I was a heavy Goods Vehicle mechanic. I gave up heavy Goods Vehicle mechanics 20 years ago, but I knew a lot of haulage companies and drivers for a long time.
    The various governments over that time period introduced a flood of legislation, tachographs, the spy in the cab, requiring a period of class 2 driving before taking a class1 license, operators licenses, 5 year medicals instead of 10, CPC, on top of all of that a driver is responsible for everything, he doesnt load the truck but is responsible for the load, if overweight it is a £1000 pound fine, get caught twice and you lose your license for a year, get caught with an illegal stowaway in a load you know nothing about, another £1000 per stowaway, it just goes on and on IR35 a new tax law applicable only to truck drivers
    All this in an industry that pays the same as burger slinging in Mac Donald’s, the foreign drivers always broke all the rules all the time, if they were unlucky enough to get caught they just skipped off to Poland and screw the fines. As usual the root cause of no drivers is the Government.

    • Old School says:

      Same in the states for a lot of construction contractors. Illegals working the gray market without the expenses of running a legal business. Hurt a lot of blue collar guys and that is big reason T got elected.

  35. Trucker guy says:

    I was in the Walmart last night. No uncrustables, no lunchables, even sold out of mini raviolis. Not quite sure when a restock is coming but if it’s not in the next few days, I’ll surely perish. I had to resort to a hungry man meal. A fate worse than the damned.

    • Anthony A. says:

      Trucker guy, I went through 4 years of college on Hamburger Helper and most of the time I didn’t have any hamburger to mix with it. You can get by!

      • Old School says:

        Poor people used to eat banana sandwiches and cheap potato chips for lunch when I was a kid.

        • Sierra7 says:

          Old School (and others)
          Bottom line advantage:
          Learn how to cook.
          Even home made veggie soup is better for you than most eat out meals. And if u are lucky and can get your hands on some good “soup meat” you can create nirvana!

  36. Auldyin says:

    “Sales up some, costs up a whole bunch, profits down.”
    Oops! Wrong answer. SELL.
    “The company said it would implement more price increases to deal with rising costs. In its outlook, it upped the hit to earnings per share from surging commodities costs and transportation woes.” Excuses! Too late. SELL
    Shareholders pay these guys megabucks to protect their dividends. We’ve been talking about inflation here for months so how come these guys didn’t position for it and cover their prices. They’ve given everybody a free gift of company profits.
    This is a classic example of how managements now have another crucial angle to answer to the markets for. Some companies will be ahead of the curve and their story will be :-
    Sales up, costs up, and profits up. These are the ones you need to find to preserve your net worth in an inflationary scenario.
    Just sayin’

  37. topcat says:

    Just in case no one noticed….

    WASHINGTON, Aug 26 (Reuters) – U.S. corporate profits surged to a fresh record high in the second quarter, boosted by robust demand and higher prices,

  38. Winston says:

    Wanted: 80,000 truck drivers to help fix the supply chain
    October 19, 2021

    The trucking industry is short 80,000 drivers, a record high, Chris Spear, President and CEO of the American Trucking Association… That’s a 30% increase from before the pandemic, when the industry already faced a labor shortage of 61,500 drivers. Truck drivers move 71% of the US economy’s goods, but represent just 4% of the vehicles on the roads, said Spear.

    This comes at a time when US ports are backlogged — primarily because there are few trucks and drivers to pick up cargo — creating a supply chain slowdown… ports can’t yet work around the clock because importers don’t have enough drivers to move their cargo at all hours.

    • Winston says:

      UNfixable…

      • Winston says:

        Except, perhaps, over the long term by GREATLY increasing trucker pay and lowering in the entry age for interstate truckers to 18 which will then serve to increase or maintain the inflation rate.

        Fully automated trucks to crash into things like Teslas but in a much bigger way are also a long term fix. Any of that is probably more effective than many billions of debt-based funds via an “infrastructure and transportation” pork filled bill.

        BTW, the tucker shortage not only affects the ports, but also affects the ability to quickly remove trailers from rail heads.

        • topcat says:

          it will all go away when people stop buying so much stuff.
          This is being caused by a huge spike in demand.

    • Anthony A. says:

      Let’s gt Elon on this!

      His fleet of auto driving electric semis should be ready to roll into the ports any day now. We won’t need as many human drivers anymore!

    • elysianfield says:

      “This comes at a time when US ports are backlogged — primarily because there are few trucks and drivers to pick up cargo”

      …In part because there are….

      Think there is only one problem and a quick fix? Probably not

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