Sentiment surveys confirm that consumers are very aware of rising prices, and they are complaining about them. People hate inflation.

Interestingly, inflation hasn't really stopped people from spending. Economic data confirm this.

This contradiction helps explain why, despite poor vibes, the economy continues to grow, profit margins continue to expand, and corporate earnings continue to rise.

A recent research note from Goldman Sachs highlights studies reflecting these trends.

First, they cite two studies (this and this) that provide evidence companies have been increasing price markups on the stuff they sell. This evidence is in line with data showing gross profit margins have been expanding.

(Source: Goldman Sachs)

"After-tax corporate profits as a share of value added have roughly doubled from about 5% in the late 1980s to over 10% recently," Goldman economists wrote. "Over the same period, U.S. firms have substantially raised markups, the amount by which prices exceed the marginal cost of producing goods and services."

At least some of this trend toward rising markups over the years can be explained by falling costs. Regardless, the point is that what customers are paying increasingly covers much more than the costs.

But why hasn't there been more pushback from ...