Record profits, terrible service: something’s got to give for US consumers

<p>No wonder consumers feel so squeezed, disrespected and preyed upon. As a result, they are becoming “reactive”, said Alexander DePaoli, a Northeastern University marketing professor who studies consumer anger. They’re starting to see brands as “a rival or an adversary” and are trying to beat them at their own game.</p>

<p>The power dynamics are out of whack, though, that dangerous bus rides and product boycotts are no answer. A broader fix may be necessary if the United States is to return to its customer service glory years.</p>

<p>“Asking why [companies] went ‘bad’ is like asking why a company that sells reasonably priced goods on the near side of the TSA checkpoint is charging $15 for water on the far side of the TSA checkpoint,” at an airport, said Cory Doctorow, author of Enshitification<em>: </em>Why everything suddenly got worse and what to do about it. “It’s not because they’re evil, it’s because you can’t go anywhere else to buy your water.”</p>

<h2><strong>Trapped consumers, soaring profits</strong></h2>

<p>A feeling of forever being ripped off helps explain why consumers have never felt more pessimistic, even though the US economy, by the numbers, continues to perform well.</p>

<p>US consumer sentiment, tracked for over 60 years by the University of Michigan, has hit a new low, thanks to cost-of-living increases many say are eroding their personal finances.</p>

<p>At the same time customer complaints about goods and services are at record levels, and surged 16% in the first quarter, according to the university’s American Consumer Satisfaction Index, which has tracked the figure since 1994.</p>

<p>Yet unhappy customers decide to stay with the companies they do business with – because they may think either that another company will treat them as badly, or they simply don’t have an option. “Paradoxically, and contrary to what occurs in efficient markets, customer retention has increased,” the satisfaction index’s founder, Claes Fornell, <a href="https://theacsi.com/news-and-resources/press-releases/2026/05/12/press-release-national-acsi-q1-2026/" target="_blank" rel="noopener noreferrer">wrote in May</a>.</p>

<p>In many cases, Americans just have no other options, unlike in other developed consumer economies,<strong> </strong>where stricter anti-monopoly policing has protected competition.</p>

<p>In the UK, “I have multiple choices of broadband supplier and energy supplier,” explains Marcus Herbert, the editor of Money Saving Expert, an influential British consumer advocate website. “Consumers have true power in a world where they can switch their business to another provider.”</p>

<p>With customers stuck and competitors gone, companies can raise prices without improving customer satisfaction, Fornell <a href="https://theacsi.org/news-and-resources/press-releases/2026/02/10/press-release-national-acsi-q4-2025/#:~:text=Market%20concentration%20is%20masking%20real,GDP%20growth%20and%20rising%20inflation." target="_blank" rel="noopener noreferrer">explained in February</a>. “These are not signs of a healthy economy,” he added.</p>

<p>Corporate profits after tax jumped sharply during Covid, and hit a seasonally adjusted annual rate of $3.7tn by the end of 2024, about double what they were in 2012.</p>

<p>Despite a hit from tariffs at the end of 2025 and the impact of the US and Israel war with Iran, they jumped again in recent months, to $3.9tn in the first quarter of 2026. <br /><br />

The pandemic “accelerated the transition toward the digital economy, which likely helped firms, particularly those in the retail and wholesale trade industries, produce more with fewer resources”, St Louis Fed’s economist, Ricardo Martin, <a href="https://www.stlouisfed.org/on-the-economy/2025/apr/whats-driving-surge-us-corporate-profits#authorbox" target="_blank" rel="noopener noreferrer">explained</a>.</p>

<p>As a percentage of gross domestic product (GDP) – the widest measure of the US economy – corporate profits hit a post second world war high of 15.8% in the fourth quarter of 2025. At the same time, employee compensation, as a share of GDP, has dropped to less than 10%.</p>

<p>The gap between company profits and employee compensation, as a share of GDP, has never been greater, notes KPMG chief economist, Diane C Swonk. It is essentially “a measure of inequality, which creates social and economic instability”.</p>

<p>The French revolution, she notes dryly, “is an extreme example” of that instability.</p>

<h2><strong>Consolidation’s benefits dry up</strong></h2>

<p>Things feel so bad, especially for older Americans, because many had it so good for years.</p>

<p>Being a US consumer through the later decades of the 1900s was marked by how much more stuff, in the form of goods and some services, many people could afford than generations before. Consumers had consolidation to thank for relatively lower prices and greater choice, even as big box stores like Walmart hollowed out downtowns and left behind low-wage jobs.</p>

<p>Goods prices, compared to income, plummeted as manufacturing moved overseas and big national retailers grew, squeezed out economies of scale and took control of distribution networks. The introduction of Amazon exacerbated that lower prices trend.</p>

<p>“As frustrated as people are in the US, there is a decline between 1990 and 2012 of 33% cost of retail goods as related to your income,” said Sergio Ocampo, an economics professor at the University of Western Ontario who researches retail concentration. “That is almost impossible to achieve without the efficiency gains from consolidation.”</p>

<p>The sharp declines in retail prices stalled by the end of the 2010s, Ocampo notes, and the infrastructure that these giant companies control is a hurdle to new players. “There is nothing new coming … now if you want to start a new retail business you run into problems,” he said. <br /><br />

Food, airlines and telecoms have similar trajectories.</p>

<p>Four giant food-producing companies control at least 50% of the market for the most popular groceries Americans buy, a <a href="https://www.theguardian.com/environment/ng-interactive/2021/jul/14/food-monopoly-meals-profits-data-investigation" target="_blank" rel="noopener noreferrer">2021 Guardian investigation found</a>.</p>

<p>The relative cost of airfare plummeted in the 1970s, making air travel affordable for the masses, it is now creeping up and service complaints hit <a href="https://pirg.org/edfund/resources/plane-truth-2025/" target="_blank" rel="noopener noreferrer">new records in 2024</a>. Over 20 airlines in the 1970s have <a href="https://eotles.com/blog/Airline-Merger-Visualization/" target="_blank" rel="noopener noreferrer">merged into seven,</a> just four airlines control nearly 70% of total market share and <a href="https://www.transtats.bts.gov/airports.asp?20=E" target="_blank" rel="noopener noreferrer">one airline dominates</a> market share in several major domestic airports.</p>

<p>And a series of multi-billion dollar telecom mergers in recent years has been followed by broadcast consolidation that’s creating a <a href="https://www.theguardian.com/media/2025/sep/26/kimmel-controversy-tv-broadcasting-consolidation" target="_blank" rel="noopener noreferrer">dangerous concentration</a> of one-stop information, mobile, internet and entertainment giants.</p>

<p>Michael Mooney, a retired small business owner in Holland, Michigan, navigated long wait times, grating ad loops, multiple hangups and an argument with a company representative before he could cancel his cable package with Spectrum. The company charged him $170 per month to keep his internet, then started raising the price.</p>

<p>“I would jump to another company in a heartbeat, but as with many people I’m sure, there is no alternative company where I live … What a racket. I thought regional monopolies were illegal,” Mooney told the Guardian.</p>

<h2><strong>A tipping point?</strong></h2>

<p>All that consumer rage can be channeled, says Doctorow, who recommends getting involved in very local politics to address specific problems. For example, <a href="https://ilsr.org/broadband/" target="_blank" rel="noopener noreferrer">community-owned broadband networks</a> to address telecom deserts have been backed by voters and residents across the political spectrum. “The only Americans who like their internet are Americans with municipal fiber, and most of them are rural red state towns,” he said.</p>

<p>Bipartisan lawmakers have introduced 40 bills in 24 states to curb ‘surveillance pricing’ in which companies use personal data to set individual prices, so far in 2026. New <a href="https://www.theguardian.com/business/2026/apr/23/jetblue-lawsuit-personal-data-ticket-prices" target="_blank" rel="noopener noreferrer">class action lawsuits</a> are taking on JetBlue and other companies over the issue.</p>

<p>Consumers’ rising outrage is part of a growing awareness that many of these business practices are a destructive force on the economy, said Lindsay Owens, the executive director of the Groundwork Collaborative, a Washington thinktank aimed at increasing public power.</p>

<p>“The incredible exponential growth in efforts to contain dynamic pricing suggests we may be reaching a tipping point,” she said.</p>

<p>And local authorities are stepping up.</p>

<p>States and cities are “really taking up the mantle on this and doing great work”, on passing rules on junk fees and surveillance pricing, said Susan Weinstock, the CEO of the Consumer Federation of America, an umbrella group of consumer activists. “Once California and New York pass the laws, industry has to listen because that’s a lot of customers,” she said.</p>

<p><em>The Guardian is <a href="https://www.theguardian.com/us-news/series/consumed" target="_blank" rel="noopener noreferrer">examining the increasingly antagonistic relationship</a> between companies and consumers in the United States. If you’ve found yourself going to extreme measures to stop giving money to a company that you think is treating you badly, we’d love to hear about it here or at <a href="mailto:consumed@theguardian.com" target="_blank" rel="noopener noreferrer">consumed@theguardian.com</a>.</em></p>

Guardian Sport · Jun 24

Guardian Sport · Jun 24

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