Squishmallow Discount! Some Retailers Are Backpedaling From High Prices

Everything is so expensive.

When we recently asked a guy who was doing some work on the LakeExpo boat what the cost would be, he joked, "I'm thinking about a million dollars. Isn't everything a million dollars anymore?"

Feels like it.

As a result, retailers across the country say they're backpedaling on product prices, which have skyrocketed in the past five years (trying to think what kicked off this insanity in 2020... give me a minute...)

CNN reported on Wednesday that big retailers are cutting prices significantly as they see they overshot on their price-spiking during Covid-era inflation.

Even Squishmallows are getting less expensive, as Walgreens admits they overcooked the prices. A 20% price cut on those loveable 16-inch squishy plushes means some parents can actually start saving for their kids' college tuition.

This price retreat was inevitable: it's the necessary correction to the price-spiking that came from inflationary government policy over the past several years. As the government dumped money into the economy (Remember those stimmy checks? Remember what you did with yours?), prices everywhere rose.

More cash sloshing around created more demand for products and services ("$3,500?! I'm buying a new _____!"), and the spike in demand met with a decrease in supply (gratis Covid shutdowns), so prices went up.

Everybody — from retailers to service providers — had to "guess higher," to see what new, high price the market would bear. And so we all started noticing that everything was getting more expensive.

Over time, market signals help businesses figure out if their pricing is right, and then (if they want to survive), they adjust accordingly.

This is why inflation-causing government intervention is such an awful, prosperity-destroying thing: it disrupts market signals, picks winners and losers, and creates confusion for entrepreneurs.

So Squishmallows — and hundreds of other products — are getting a major price cut.

That said, the quote from this Sarah Wyeth (managing director, retail and consumer with S&P Global Ratings) at the end of that CNN article betrays the anemic understanding of economics that is our true national pandemic.

It’s not retailers’ jobs to “shake consumers out of that frugal mindset.” It’s their job to create value.

Businesses need to focus on creating value, solving actual problems, and investing in good marketing. Do that, and customers will find room for you in their budget.