Friday, May 1, 2009

Someone's Missing Something...Maybe It's Me

Today's issue of The Wall Street Journal had an article with this headline, "P&G, Colgate Hit by Consumer Thrift" (content free as of this writing).

The story indicated that two of the big consumer product conglomerates Procter & Gamble and Colgate-Palmolive have moved to raise prices in the face of falling sales to keep quarterly profits from deteriorating. Both companies indicated higher total sales on declining sales volume.

It appears both are depending on the consumer's product loyalty to keep shareholder's happy. (Just to be clear, my mutual funds hold shares of these companies the last time I checked.) Either someone hasn't explained a demand curve and/or the idea of prospering by looking out for the consumer –what some might refer to as the "invisible hand."

It will be interesting to see how the firms prosper as the current cycle unwinds. Your thoughts are welcome.

This post relates to the following Keystone Economic Principles:
1. We all make choices.
3. All choices have consequences.
7. Economic thinking is marginal thinking.

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