As we enter 2023, I wish everyone a Happy New Year. This year begins with daily news articles concerning a recession resulting from a slowing economy and high prices, all of which I believe to be true. But other less-reported stories cause me to wonder what is really going on. Let me list a few examples:
The net profit for the ten major carmakers went from $14 billion in 2020 to $54 billion in 2021. If all the stories of increased prices for parts and increased interest rates were accurate, how did the car companies increase their profit by almost 400% from the previous year?
The five major oil companies made a profit averaging $45.2 billion each for 2022. That is more than double the profit reported the prior year – so much for government policies driving up gasoline prices.
I have read many stories about the decline in disposable income due to high prices. Well, I know one place where a lot of income went. New York State filed a report on the results of the operations for the first year online sports betting was allowed in New York. The Betting Handle for NY state sports betting was $16.2 billion, and the tax revenue was almost $700 million. So, I guess some New Yorkers had some disposable income. And, if you like football, Ticketmaster is presently selling Superbowl tickets for $4,500 each. I wonder if anyone will attend the game this year?
Finally, wages have certainly kept up with prices for some workers. The cut-off for contribution to the Social Security fund is now $160,200 for 2023. That is a lot of money for most people but not all. There are nearly 10 million people who received a salary above that amount last year. The average bonus paid to the workers on Wall Street exceeded $257,000 in 2021, which does not include their base salary. For most, there were no deductions for Social Security from those amounts.
So, we can all see a pattern here, and it is NOT a slowing economy, but more of capitalism and price-gauging at its finest!