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Vast corporate profits are delaying an American recession

Strong pricing power for firms makes the economy more resilient

TO THE ears of many, "pricing power" is something of a dirty term. For left-wingers it conjures up images of greedy corporations abusing their market dominance to charge more. For economists it raises the spectre of sticky inflation as companies ratchet up prices to cover higher costs. But from another perspective, pricing power is less of a problem: it enables firms to withstand the kind of inflationary pressures that they are now experiencing. In so doing, it serves as a shock absorber for the economy, forestalling the risk of a recession.

The past few weeks have put pricing power in the spotlight in America. According to data published on August 25, post-tax corporate profits reached 12.1 per...

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