Kamala Harris is closing in on the perfect economic message—but the left’s price-gouging exaggerations could undermine it

Most states, including California, have price-gouging rules that go after unjustifiable price increases on essential goods and services during emergencies such as pandemics and disruptive weather events. As California Attorney General, Harris saw unscrupulous attempts to take advantage of crises and she responded. As president, she would propose comparable federal legislation. In the Ruhle interview, she went on to say that only a few companies, not the majority, engage in price gouging.

Harris maintains that corporations should not use crisis conditions to increase prices and grow their profit margins. But she also believes that in normal conditions, competitive markets should determine prices and profit margins. Harris, unlike some of her supporters, does not assert that universal market failure driven by excessive profit-taking across industries is the cause of inflation—such assertions are inaccurate and misleading. 

As political leaders prepare for the next economic crisis, there are real risks in misidentifying the drivers of inflation. To contain inflation, the federal government should focus on countercyclical macroeconomic measures, the independence of the Federal Reserve, skilling and growing the labor force, and fostering competitive, resilient, and secure global supply chains. This combination of policies is currently bringing the U.S. economy to a soft landing as inflation cools rapidly and the economy keeps growing.  

However, many voters are looking for someone to blame for the surge in inflation that occurred in 2022-23 and has left prices higher than they were before the pandemic. Those looking for an “inflation villain” find support from populist policy wonks, many of whom have no business experience and minimal understanding of economics.

In comments to CNN, Senator Elizabeth Warren stated, “Giant corporations are taking advantage of supply chain challenges to jack up prices and pad their profits.” To which U.S. Chamber of Commerce CEO Suzanne Clark aptly responded, “They’re just plain wrong… There wasn’t some magic burst of consolidation in the last month or the last quarter.”

In fact, Senator Warren and others often single out retail grocers as the primary culprit of price gouging and profiteering. The truth is that retail grocers have some of the lowest profit margins of any going concern business—far less than 2%, going back decades. This includes the largest retail grocers, Kroger and Albertsons, who have faced increased scrutiny by the FTC for an attempted merger of the two. As you can see, they have not even eked out 2% profit margins on average in the last decade.

Even the much-cited cost of eggs is not due to a market failure in grocer profits. Rather, market efficiency drove prices up in response to an unprecedented wave of avian flu that caused the unfortunate loss of 100 million hens and a third of the U.S. egg supply.

The assertion that price-gouging and corporate profiteering caused inflation, an assertion that Harris does not believe, is dangerously wrong. It also supports the distorted messaging by Donald Trump that the economy was better under him and has been terrible under the Biden-Harris administration. That distorted view risks becoming accepted as reality as he relentlessly repeats unfounded assertions due to the “sleeper effect.”

While corporate scapegoating has political appeal with some Democratic voters, it detracts from the message Harris should be trumpeting at every campaign stop: The economy is as strong as it has ever been. Criticizing a few companies for price gouging and for taking advantage of the desperation of the American people for higher profit margins promotes the divisive culture of class warfare and runs counter to Harris’s core message of creating an America for all, “focusing on the future,” not the past.

Our proprietary analysis of the most recent fiscal year (2023) revenues and profits of Fortune 100 companies finds little to no evidence of corporate price gouging or profiteering. To the contrary, our analysis finds that the largest corporations are responding to consumer demands by containing price increases and introducing value products and discount programs. Their actions are reflected in the latest inflation rate, which is now trending below the Federal Reserve’s target rate of 2% on a three- and six-month basis.

While modestly falling in 2020 after a brief recession at the onset of the pandemic, corporate revenues surged ahead the following year amid a “rebound” in consumer demand for goods. Pent-up demand was further encouraged by an increase in disposable income from government stimulus payments under the Trump and Biden administrations, an increase in household wealth from surging asset prices, and a resilient economy with historically low unemployment. Heightened demand for goods soon expanded to services, extending the rally in revenues.

However, the revenue boon came as businesses struggled to not only keep up with record demand but also navigate price increases. Cost pressures stemmed from stretched supply chains, rising geopolitical tensions and conflicts, commodity price volatility, and other idiosyncrasies, such as a severe avian flu season. CEOs were forced to raise prices in a balancing act between cost recovery and customer value. As might be expected with the confluence of factors, inflation soon arrived.

Such pricing practices are not unusual for companies—nor is the inflation that follows, particularly after an economic recession. As politically motivated allegations of corporate greed stirred, a study by the Federal Reserve found evidence that price increases (implemented to support profits) in the most recent economic recovery contributed a “surprisingly” lower amount to inflation than the historical average. The study noted that the recent pattern “is consistent with firms raising prices in the first year of a recovery in anticipation of higher future costs, which are realized in the second year of a recovery.” In short, politically skewed studies, like those from the Economic Policy Institute, do not recognize the natural lag effect in retail prices after a year during which the cost of goods increased.

The conclusion from the Fed analysis holds for the largest companies. Looking at real revenue growth—calculated as total revenue growth minus inflation, as measured by the Producer Price Index—before and after the pandemic, the first year of the recovery (2021) saw a spike in real revenue growth (10.3%) driven by robust demand and anticipatory price increases, along with inflation already rising (7.0%), while year two (2022) realized the expected peak inflation (9.5%) and more modest real growth (3.5%).

By 2023, real growth (3.3%) was well below the rates of the three years preceding the pandemic (4.6% – 6.6%). The measured approach in real revenue growth after the pandemic (3.6%) indicates that big business did not generally engage in price-gouging practices when compared to the pre-pandemic rate (3.3%).

A review of profit margins further confirms that the Fortune 100 acted prudently and methodically as they managed price increases. Margins widely fluctuated in the two years after the pandemic but eventually settled at 2019 levels (9.0%) in 2023. Moreover, real gross value-added data from the U.S. Bureau of Economic Analysis reveals that profit margins were only able to match the historical average due to the low interest rate environment and did not come at the expense of labor, as some progressives charge.

Most sectors appear to have practiced caution when implementing price increases. The energy and industrials sectors may be considered outliers after comparing the annualized growth rates of revenues and profits as well as profit margins before and after the pandemic. In recent years, major Industrials players saw an expansion in revenues and profit margins. John Deere, AGCO, and Caterpillar were among those largely attributing price increases—of approximately 36%, 33%, and 21% since 2020, respectively—to the improved performance.

However, above-average growth and margin improvements do not necessarily mean a company or sector is a “bad actor.” Notably, corporations in industrials often cited enhanced product mix and operating efficiencies as sources of improvement.

Performance can also be partly determined by commodity market movements, an element most cannot control. The degree to which sectors should benefit when times are good is another matter. For example, the energy sector benefited from “record-high” refinery margins and throughput as well as high oil prices, allowing big oil companies to more than double profits in 2022. The uplift was in part due to Russia’s invasion of Ukraine, but strong refinery margins and the rising dominance of U.S. oil and gas production kept margins elevated through 2023 for some companies.

Rare instances of more questionable corporate practices may exist in other sectors. For instance, pharmacy benefits managers have long received attention for the highly concentrated market pushing prescription drug prices higher by 30% to 40%. Baked goods serve as another example. The three largest companies hold a market share of more than 50%. Between 2019 and 2023, Flowers Foods, Pepperidge Farms, and Bimbo Bakeries U.S.A. saw adjusted profit margins increase 1 to 2 percentage points, with the first two companies reporting price increases of approximately 43% and 33%, respectively. (Only operating margin data is available for Pepperidge Farms. No pricing data was available for Bimbo Bakeries U.S.A.)

However, the good actors far outweigh the bad. Consumer-friendly market actions are more readily found across sector segments.

In entertainment, fierce competition between Walt Disney’s Disney World and Comcast’s Universal Studios is containing base ticket prices and driving innovation. While average one-day ticket prices have increased by 10-20% since 2019, Disney recently introduced a value program in response to customer feedback. Both companies have also announced major investments into their respective theme parks in a bid to attract more consumers.

In diapers, price increases have been widely and loudly monitored. Retail prices reportedly rose by 35% from 2019 to 2023 due to higher raw materials costs and excess demand. Despite market concentration, the diaper market is price-competitive. Shoppers can find many products across price points from no-frills, budget-friendly to high-tech, high-cost diapers. New, noteworthy competitors have also entered the market in a direct response to consumer demands for more affordable options.

In groceries, Walmart has outperformed its peers by responding to consumer demands for affordable, quality products with the continued investment in and expansion of its private label brand. CEO Doug McMillon has even directed his team at the iconic value retailer to “aggressively” push back against proposed price increases from food suppliers. The CFO, John David Rainey, succinctly summarized their market strategy as one that will “grow business on a sustained basis in the absence of price inflation.” The Biden-Harris administration may welcome such actions given their focus on more concentrated product markets, such as meat processing and beverages.

Clearly, the market forces inherent to the capitalist system are strong and well. Declining inflation only provides additional evidence. While the cumulative price pressure on the public cannot be ignored, populist claims that cast unfounded blame on corporations allegedly exploiting “times of crisis to excessively and indefensibly increase their profit margins at the expense of American families” should stop. The rhetoric only promotes class warfare to the detriment of the American economy. The data is clear: Attributing high prices to widespread price gouging and profiteering by big business is misleading. Where questionable practices do exist, competitive markets quickly take their own corrective actions. As Harris notes, price-gouging laws are only applicable under special crisis or emergency conditions in non-competitive markets. Some may recall such exploitation from the odious “pharma bro” Martin Shkreli of Turing Pharmaceutical who jacked up Daraprim prices 5446% 10 years ago, but these are rare outliers.

Harris aspires to represent a unified patriotic American spirit. Success and work ethic drive the strength of the American economy, not class divisions. Trump uses a similar theme unifying blue-collar workers and wealthy financiers in a shared celebration of success. The opportunity economy, which Harris pledges to create, means opportunity for everyone—including business owners, entrepreneurs, and great American companies. 

The media’s focus on Harris’s promise to go after price gouging overlooks her celebration of the accomplishments of America’s companies and their workers. It also overlooks the consensus among top economists that Harris would be much better than Trump on inflation. In these closing weeks of the campaign, when the economy remains a top issue among voters, the Harris campaign should emphasize its desire to partner with the business community to create opportunity for everyone. 

More must-read commentary published by Fortune:

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.