These insights are consistent with what can be seen in a business cycle framework, using national income data. Estimated markups for the nonfinancial corporate (NFC) sector are graphed in Figure 9.18 The figure includes data for two business cycles.19 In both the 2009 and 2020 recoveries, markups rose as the expansion got under way. This is consistent with previous business cycles; markups typically increase at the beginning of a recovery.
However, the increase in markups in the 2020 recovery has been higher than those in the 2009 recovery. During the 2009 recovery, the average of the trough value and the subsequent seven quarters was 7.6 percent. During this recovery, the average was 8.7 percent. That is, in this recovery, rising markups increased NFC prices by about 1 percentage point more than they did in the previous recovery. These data, together with the other data cited above, show that prices grew proportionally more than costs during this recovery. That, by definition, has added to price inflation and to corporate profits. Corporate exercise of market power has had a measurable effect. 2b1af7f3a8