The Alibi Economy
How Industries Use Crisis as a Profit Engine: An AK Dossier
Executive Summary
Every major disruption of the past six years, pandemic, war, supply chain chaos, rate hikes, climate shocks, has come pre-packaged with a corporate alibi: We had no choice. Costs went up. The world is unpredictable. Meanwhile, the profit data tells a different story. In Canada alone, pre-tax corporate profits hit $644 billion in 2023, a 54% increase over 2019’s pre-pandemic baseline, with profit margins remaining above their pre-pandemic average in 18 of the 21 largest non-financial industries. In the United States, corporate profits reached $4 trillion by Q4 2024, 2.3 times their pre-pandemic level. The pattern is not random, and it is not new. It is a playbook: manufacture or inherit a crisis narrative, deploy it as consumer permission to raise prices, and pocket the gap between what costs actually rose and what prices were charged.
This dossier calls the playbook what it is: The Alibi Economy, a system where every crisis becomes a pre-written excuse, every hardship headline becomes a margin opportunity, and ordinary people pay the difference.
The Pattern: What the Alibi Economy Looks Like
The mechanism is consistent across industries:
- A genuine shock occurs: war, pandemic, supply disruption, rate change.
- Companies publicly emphasize cost pressures, using earnings calls, trade association statements, and media coverage.
- Prices are raised: often well above the actual increase in input costs.
- When input costs later fall or stabilize, prices do not follow.
- Profits expand, margin ratchets upward, and the shock becomes the permanent new baseline.
Research from the University of Massachusetts Amherst traced price hikes at multiple companies directly to executives’ public statements indicating that the pandemic, Russian invasion of Ukraine, and supply logjams gave them “headroom to raise prices without significant backlash from consumers”. Corporate profits drove 53% of inflation during the second and third quarters of 2023, compared to just 11% of price growth in the four decades prior to the pandemic.
The term greedflation exists and is used by economists, but it does not fully capture the systemic, cross-industry, alibi-dependent nature of what is happening. Greedflation describes the outcome; the Alibi Economy describes the method.
The Sectors: Industry-by-Industry File
Oil & Gas: The Original Alibi Artist
BP’s Q1 2026 results, its first financial report since the outbreak of hostilities in Iran, attributed the surge to “exceptional” oil trading activity and midstream operations. In plain terms: BP’s trading arm profited from the volatility itself, not just from higher prices being passed on. The company is simultaneously exporting roughly 100,000 barrels per day through the nearly-closed Strait of Hormuz while publicly framing the conflict as a supply threat. (Please see this article).
The alibi is structurally embedded. Every geopolitical disruption in or near an oil-producing region triggers a narrative of “supply uncertainty,” which drives up spot prices, which widens refining margins, which inflates trading profits, all while consumers pay more at the pump and for everything transported by fuel. Oil and gas in Canada went from negative average margins before the pandemic to 17.6% in 2023, a swing that no cost-pass-through story can fully explain.
Grocery Retail: “We Only Make $1 on a $25 Basket”
The grocery industry’s alibi is perhaps the most brazen because it was delivered directly to Parliament. Loblaw’s CEO testified under oath that the company makes only “a $1 profit on a $25 basket of groceries”, roughly a 4% margin, framing this as evidence of restraint. That framing conveniently ignores that 4% on billions of dollars in revenue is enormous, that the margin had doubled from pre-pandemic levels, and that profits remained at historic highs even as inflation slowed.
From 2021 to October 2024, rent prices in Canada increased 21.6%, but so did grocery profit margins. The major chains insist they only passed along unavoidable costs, yet analysis of their sustained margins long after input costs retreated proves that at minimum, the cuts did not follow. In Canada, petroleum refining profits rose over 1,000% since 2019, while food manufacturing and grocery retailers both posted extraordinary margin expansions.
The alibi runs like clockwork: supply shock (COVID, war, weather) → price hike → public statement about “headwinds” → margin holds even when shock fades → repeat.
Banking: Profiting From the Very Crisis They Diagnose
Banks occupy a unique position in the Alibi Economy: they are simultaneously positioned as commentators on economic hardship and beneficiaries of it.
During the inflationary period, banks offered depositors interest rates as low as 0.01% on savings accounts while charging borrowers at rates tied to aggressive central bank hikes — a spread not seen in the previous half-century. JPMorgan, Bank of America, and Wells Fargo publicly advertised savings rates as low as 0.01% while inflation ran at 9.1%. Banks told shareholders that “deposit betas”, how quickly they pass rate increases to savers, would remain “advantageous” for quarters ahead.
The alibi: “Inflation is a global force. Interest rate uncertainty is our challenge.” The reality: inflation and rate hikes simultaneously widen the gap between what banks pay depositors and what they charge borrowers, creating what the IMF identifies as “gross exposures” that most banks hedge in their favour. Canada’s Big Six used record profits not to reduce fees or increase rates for savers, but to pay out $18.8 billion in bonuses at year-end 2021.
Airlines: “Headwinds” All the Way to the Record Books
The airline industry has perhaps the most sophisticated alibi infrastructure of any sector, operating through a permanent trade body, the International Air Transport Association (IATA), that regularly issues alarming cost reports which function, in practice, as pre-emptive justification for fare increases.
In 2025, IATA published a joint study with Oliver Wyman calculating that supply chain disruptions would cost airlines $11 billion in extra costs. The media dutifully reported this figure. What received less attention:
- In the same year, airlines posted $36 billion in net profit on record revenues of $979 billion
- Passenger load factors hit a record 83.5% in 2024, meaning demand was outstripping supply
- The airline sector is projected to post $41 billion in profit in 2026 on revenues of $1.05 trillion, a historic record
This is the Alibi Economy’s most elegant trick: the $11 billion cost story gets the headline, the $36 billion profit reality gets the business page footnote. Constrained supply due to “supply chain disruptions”, i.e., fewer planes than demand warrants, is precisely the condition that allows airlines to charge more per seat while spending their PR budget explaining why they are struggling.
Real Estate & Housing: Disaster as Business Model
Housing is the sector where the Alibi Economy causes the most direct physical harm. When oil is expensive, people cut driving. When rent doubles, people become homeless.
Canada’s rental housing market is a textbook case. With five million renters competing for two million purpose-built rental units, landlords operate in a structurally captive market. Yet the framing in policy and media consistently treats rent inflation as an impersonal force, supply and demand, interest rates, construction costs, rather than a pricing decision made by entities holding disproportionate power.
Corporate and financial landlords control approximately half of Canada’s purpose-built rental market. In the LA wildfires of early 2025, landlords in displacement zones raised rents by over 300%, spikes that appeared to violate California law and illustrated the terminal logic of the Alibi Economy: every disaster is an opportunity to reset prices upward, justified by the chaos the disaster itself creates.
Real estate holds the highest profit margins among major non-financial sectors in Canada’s economy, even after slight post-peak compression. Housing affordability, meanwhile, has deteriorated to crisis levels in every major Canadian city.
The Tactics: A Field Guide
The Macro Evidence
The Alibi Economy is not a series of isolated incidents. It is a structural shift in how corporate profits relate to national income:
- U.S. corporate profits: Averaged 13.9% of national income between 2010-2019; reached 16.2% by end of 2024
- U.S. corporate profit margin: Rose from approximately 6% twenty years ago to 10% by 2024
- Post-pandemic U.S. corporate profit surge: $4 trillion by Q4 2024, up 54% since 2019
- Canada: Pre-tax profit margins averaged 8.1% from 2010-2019; jumped to over 12% in 2021-2022 and remained at 10.7% in 2023
- Investment lagged: Despite profits doubling post-pandemic, non-financial Canadian corporations did not increase investment, average investment was $205.9B/year pre-pandemic and $205.1B/year in 2021-2023
- Shareholders got paid instead: Dividends and share repurchases equaled 68.2% of net profits for non-financial Canadian corporations in 2023
The last point is the most damning. If higher prices were genuinely driven by higher costs and genuine business pressures, those profits would be reinvested in productive capacity. They were not. The money moved directly to shareholders.
The Alibi Economy vs. Greedflation: Why the Distinction Matters
“Greedflation” already exists in the lexicon and captures the outcome. The Alibi Economy captures the method, specifically, the narrative infrastructure that makes pricing power invisible and unchallengeable. The distinction matters for analysis and for AK/KlueIQ design purposes:
Conclusion: The Tell
The single most reliable tell in the Alibi Economy is the shareholder payout. Every time a corporation claims hardship, supply chain disruption, war, pandemic, rate volatility, the investigative move is to check the dividend record and the buyback announcements. Companies under genuine sustained pressure do not pay out 68.2% of profits to shareholders. Companies that have successfully extracted windfall margins from an alibi-covered price increase do.
The BP story that started this investigation, profits more than doubling on the Iran war, exceeding analyst expectations by 20%, is not an outlier. It is the template. Every sector covered in this dossier has run a version of the same play. The crisis is real. The alibi is real. The margins are real. The only thing that isn’t real is the story that connects them.
— AK Dossier, April 2026
Additional Research from Perplexity.