Is Amazon Keeping The Inflation Rate Low?
Published Wednesday, October 31, 2018 at: 7:00 AM EDT
Amazon's 2017 annual 10(K) federal financial filing reported $4.1 billion in net operating income. But the profit was entirely attributable to Amazon's tech infrastructure line of business, Amazon Web Services (AWS). Amazon's retail sales business reported a loss.
Unless you're a professional securities analyst or MBA, it may not be easy to discern that Amazon lost money on its main business from the company's required 10(K) annual public disclosure filing with the U.S. Securities and Exchange Commission. But it's disclosed in this table on page 69 of Amazon's 10(K) for 2017. AWS earned a $4.3 billion profit on $17.5 in net sales revenue, while total profits were $4.1 billion on well over $100 billion of sales.
Amazon could afford to take a loss on its retail business. It's a long-term investment in gaining market share. Losses taken on dominating internet retailing were offset by AWS, Amazon's business of building the infrastructure of the web, which has been very profitable.
With its strategy to expand retail market share based on razor-thin profit margins, Amazon transformed retail sales and consumer behavior over the last decade. Before buying at a traditional retail store, consumers now routinely check their phones for a lower price online. The increased efficiency of internet sales enables consumers to buy goods at insanely low prices. While Amazon became the Crazy Eddie of the internet era, it has caused disinflation.
Inflation has always been a somewhat mysterious factor in the economy. It's hard to understand its causes, and harder to control. Officials at the U.S. Federal Reserve Board have conceded in recent years their surprise at the persistently low inflation rate. Amazon is likely a factor for in prices are not rising fast in the economic boom.
This is not a recommendation to buy or sell Amazon securities but an observation about the internet retailer's impact on the U.S. rate of inflation and its implications for economic growth. In the second quarter of 2018, the government reported a 2.9% surge in productivity because real wages after inflation declined, lowering the cost of an employee to companies by nearly 1%, according to the Bureau of Labor Statistics quarterly report through June 2018.
Declining unit labor costs amid real wages is a positive for economic growth, and internet retailing is an influence in the economy to keep an eye on. Among the swirl of forces that affect inflation, ranging from international oil politics to the Federal Reserve, your Amazon shopping cart is playing a role.
- On Wednesday, We’ll Know If The Federal Reserve Will End Inflation By Causing A Recession
- Technology Drove S&P 500 1.9% Higher Friday, But Look At Tech's Terrible 2022 Loss
- Here What To Know To Invest Wisely
- Prudence Requires Positioning Portfolios For An Economic Expansion
- 2022 Was The Worst Year For Stocks Since 2008
- 4Q '22 Is Closing Strong, But Recession Expected In 1Q '23
- A Key Principle In Fruitful Investing
- Plan Now For The Next Recovery
- Ending Inflation Will Take Months
- Economists Predict Lackluster 4Q22 Growth; Fed Algorithm Predicts 4.3%
- Amid Darkening News, Positive Economic Signs
- Stocks Soared This Past Week But Economic Pain Is Still Ahead
- Factors Blurring The Likelihood Of A Recession
- Weekly Investor Update
- Stocks Rose 4.7% This Past Week, Amid A Bear Market
- 105 Years Ago In Investing: Conditions Were Much The Same As Today
- A Timely Reminder Of Why You Take Stock Risk
- Good And Bad Financial News: Weekly Investment Update
- A Financial And Tax Planning Strategy For This Week's Stock Market Plunge
- Having Trouble Tuning Out The Bad Financial Economic News?
- A Key Signal Of Strength At A Pivotal Moment In Economic History
- Despite Strong Jobs Report, Stocks Declined Last Week
- The Fed Risks A Recession To End Inflation, As Expected
- Stocks Snap Four-Week Win Streak
- Stocks Have Soared Lately, But What Should You Expect Near And Long-Term?
- Investing In An Economy Beset By Multiple Anomalies
- Despite Bad Economic News, Stocks Rose 4% In The Week Ended July 29, 2022
- Amid Bad Data Releases, Leading Economists Predict No Recession
- Despite Pandemic, Stocks Closed 2021 With A 26.9% Return
- Tracking The Economic Boom
- Fed Changes Its Inflation Stance
- Despite Inflation And Omicron, A Booming Economy
- The Week's Financial News: Crosscurrents In The Economy
- After Breaking Records For Six Weeks, Stocks Dropped -2.3% Friday
- Already Higher Than Ever, Leading Economic Index Surged Again In October
- Five Observations For Investment Planning For The Decades Ahead
- Financial Economic Outlook
- S&P 500 Closed Friday At Record High Again On Strong Earnings Reports
- With Economic Recovery Intact, Stocks Are Near Record Again
- Are The Five Stocks Driving The Market's Great Returns Overvalued?
- Despite Gloomy Jobs Report, The Economic Outlook Remains Bright
- S&P 500 Rebounded Today After A Difficult Week And Month
- China Financial Contagion Fears Come And Go In A Few Days
- August Retail Sales Indicate The Recovery Is Intact
- This Week’s Financial Economic News
- Latest Financial Economic News For Investors
- After Fed Inflation Policy Speech, Stocks Closed At New Record High
- Stocks Closed 1% Off All-Time High; Strong New Economic Data
- Stocks Broke Record High Again This Week
- U.S. Jobs Picture Improved, Covid Variant Risk Declined, And Stocks Closed Week At Record
- This Week’s Economic And Investment News
- Positive Earnings, Housing, and LEI News; Stocks Closed Week At A Record
- Holiday-Shortened Week Ends With Stocks Little Changed, Despite D.C. Drama
- The Financial Economic Situation Now
- Bull Market Has Broadened
- Why Did Stocks Close At A Record-High After Disappointing Jobs Report?
- Americans Sit On A Mountain Of Cash Amid Pandemic
- For High-Income Earners And Families, Failing To Plan Is A High-Stakes Gamble
- Stocks Break Record, But Smart Money Is Focused On Taxes
- Wall Street Reacts To D.C With A 7% Weekly Gain
- On Election Eve, Here's The Economic Outlook
- Sizing Up Economic Prospects
- Two Good Economic Surprises
- October Surprise May Be The Economy
- Economic Signs Are Fine Amid The Distractions
- Poverty Rate Dropped Again In 2019; A Sign Of Progress
- Stocks Dropped Last Week But Data Confirmed Economic Recovery
- Amid A Mixed Week For Stocks, A Strong Recommendation
- Is A Stock Bubble Bursting?
- S&P 500 Breaks Record For A Second Week
- S&P 500 Breaks New Record; Small Business Picture Is Different
- As If Coronavirus Never Hit, Retail Recovers
- Confirming Recovery Is Under Way
- Despite Grim Headlines, Stocks Rose Sharply -- Why?
- The Paradigm Shift In Valuing Stocks
- Retail Sales And Housing Starts In June Reveal Recovery's Shape
- A Spectacular Year For Stocks
- A Case For A Bull Market In 2020
- Good Economic News Again
- An Unusual Constellation Of Economic Surprises
- Longest U.S. Expansion Keeps Rolling
- Retirement Income Reality Check
- Find The Major Economic Trend Hidden In This Picture
- Is The New Record High In Stocks Irrational?
- Stocks Break New Record; Economic Outlook Clears
- Despite Frights, Can The Expansion Continue?
- Retail Sales Coverage Reflected The Narrow View Of The Media
- Small-Business Optimism Declines But Remains High
- Analysis Of New Employment, Manufacturing & Service Economy Data
- Quarter Ends Well Despite Trade War, Inverted Yield Curve & Political Crisis
- No Recession But A Slower Pace Of Growth
- Fickle Financial Headlines Brighten
- Economy Gets Bad Press Again
- Europe's Growth Problem And Your Portfolio
- Stocks Dropped 2.6% On Friday, As Reality Gap Seemed To Widen
- A Prudent Perspective On Recent Volatility
- A Tale Of Two Economies
- Amid Worries, New Equity Risk Premium Data Explained
- GDP Rose More Than Expected; Stocks Top Record Again
- Slower Growth Confirmed By June Leading Economic Indicators
- 'Twas The Last Trading Day Before Christmas
- Stock Plunge Nears Bear Territory After Fed Hike
- A Last-Minute Reminder To Give Wisely And Charitably
- Key Facts About Tariffs, Interest Rates, And Economic Strength
- Fed Chair Extends A Dovish Hand, Lifting Stocks
- S&P 500 Slid Last Week, As Earnings Growth Is Recalibrated
- Last Chance For Pre-Retired Professionals & Biz Owners
- Amid A Swirl Of Controversy, Fed Policy Remained Stable
- More Good Economic News On Friday
- Is Amazon Keeping The Inflation Rate Low?
- Analyzing The Market Correction
- This Week In Stocks And The Economy
- Analyzing The Risk Of Stocks After The 6.9% Drop
- Fed Chair: "We Remain In Extraordinary Times."
- With The S&P 500 Up 7.2% In 3Q18, What's Driving Stocks?
- Widespread Misinformation Follows Household Median Income Report
- Investment Wisdom At A Poignant Moment In History
- Good Economic Surprises Happening Now
- Economic Facts To Prepare For The Elections
- Another Member Of Music Royalty Dies With No Will
- Top 10 Indications The Economic Outlook Is Brighter Than Expected
- Wealth And Economic News This Week (2-Minute Read)
- 10 Things: New Education Tax Breaks For A Child Or Grandchild
- The Truth About U.S. GDP Growth
- 2017 Ends With S&P 500 Total Return Of 21.8%
- President Signs Historic Tax Cuts And Jobs Act; Stocks Drop A Fraction
- Good News On The Economy And A Tax Alert
- Tax Bill Drives Another Stock Market Record And Gives You To-Dos By Year-End
- An Eventful Week In Wealth Management
- Leading Economic Indicators Surge, Stocks Break Record High Again
- News Affecting Your Wealth Dominated The Headlines This Past Week
- U.S. GDP Growth Surprise Propels Stocks To New Record
- Why Does The S&P 500 Keep Breaking Records?
- U.S. Stocks Nearly Doubled In The Last Five Years
- The Big Economic News The Media Keeps Missing
- Trump Tax Plan Upends Year-End Tax Planning
- Key Senators Agree On A Road To Cutting Taxes This Year
- Year-End Tax Planning Could End With A Thrill This Year
- This Week's News About Wealth Management
- Stocks Dropped For Second Straight Week Amid Strengthening Economic Reports
- With Stocks Near All-Time High, Personal Income And Employment Data Are Released
- How Strategic Asset Allocation And Rebalancing Worked In The 12 Months Ended June 30
- Wall Street's "Top" Strategists' Recommendations Are Like Monkeys Throwing Darts
- Stronger Than Expected Jobs Creation But CNBC Reports "Trouble Lurked"
- S&P 500 Returned 2.9% In 2nd Quarter And 9.2% In First Half Of 2017
- Despite Distractions, Demographics Are Poised To Drive U.S. Long-Term Growth
- The Federal Reserve's Historic Economic Experiment Entered A New Phase
- Despite The Washington Sideshow, Stocks Closed At A New All-Time High
- Visualizing The Risk Of Running Out Of Money In Retirement
- Wall Street's Strategists About As Good As Monkeys Throwing Darts
- Stocks Surge 2% Friday But Why Are They So Volatile Lately?