President Joe Biden knows one of his biggest challenges ahead of Election Day is convincing Americans that the U.S. economy is, in fact, doing well. Ongoing inflation has drowned out that message, and the White House realizes Biden needs a more tangible villain. Corporations that have seen their profits skyrocket as prices have gone up are pretty much tailor-made for the moment, and CEOs at major companies have made themselves rich targets ahead of Thursday’s scheduled State of the Union address.
Inflation has slowed since its peak in June 2022, as the Federal Reserve has raised interest rates and pandemic-era supply chain issues have resolved. But a Daily Kos/Civiqs survey in December found that 50% of respondents believed that inflation will be “solved” only if prices drop back to where they were before the pandemic. Biden has leaned into that anger. In a December speech, he said that “any corporation that has not brought their prices back down — even as inflation has come down, even [as] supply chains have been rebuilt — it’s time to stop the price gouging.”
That message hasn’t exactly been heard in America’s C-suites. Recently, in a particularly tone-deaf comment on CNBC’s “Squawk on the Street,” Kellogg’s CEO Gary Pilnick suggested the cereal aisle for families struggling with high food prices:
“The cereal category has always been quite affordable, and it tends to be a great destination when consumers are under pressure,” Pilnick said amid a discussion about high grocery prices. “If you think about the cost of cereal for a family versus what they might otherwise do, that’s going to be much more affordable.”
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Pilnick doubled down, saying: “In fact, it’s landing really well right now. Cereal for dinner is something that is probably more on trend now, and we would expect to continue as that consumer is under pressure.”
Bear in mind that Pilnick makes $1 million a year from his salary alone and gets up to $4.4 million in bonuses. Also, consider that Kellogg’s boosted its profit outlook last year — cereal in particular has gone up 28% in price over the last four years, according to Bureau of Labor Statistics data. As you’d imagine, Pilnick’s comments went down about as well as expired milk in a bowl of Frosted Flakes.
Pilnick’s comments went down about as well as expired milk in a bowl of Frosted Flakes.
Costs have actually been leveling out at the grocery store. However, the rising cost of food in general has been a major source of inflation. Fast food prices have frustrated diners accustomed to cheap eats. Chains including McDonald’s have noted a corresponding dip in growth — but nothing close to putting them in the red — and pledged to aim for increasing affordability.
Enter Wendy’s CEO Kirk Tanner, who said in an earnings call last month the company was planning on using digital menu boards to test “dynamic pricing.” The idea that prices will rise and fall depending on time of day and demand was immediately compared to Uber’s “surge pricing,” in which prices rise during high demand. Wendy’s later clarified that it wouldn’t be raising prices at peak times but would potentially be lowering them, but by then the damage had been done.
There are plenty of other examples of corporations’ being out of touch that Biden can cite in Thursday’s address. He reportedly plans on hammering home the role that “corporate greed” has played in keeping prices high. No, there’s not much that he can do as president to personally bring down prices. But it’s vital that he push back forcefully on the GOP’s insistence that government spending is to blame for consumers’ frustrations in the checkout lane. And so long as corporations keep making it easy for Biden, dunk on them as often as possible between now and November.