Mainstream economists argue the new profit-led inflation concept is merely a matter of semantics, however. They say their peers are just describing the “standard cyclical component to profits” that occurs during business cycles, as Brian Albrecht, chief economist at the International Center for Law and Economics, a nonprofit, nonpartisan research center, told Fortune last week. But Albert Edwards, a global strategist at French investment bank Société Générale, is sticking by his theory that greedflation has been a key driver of the surge in consumer prices over the past few years.

“Greedflation is a controversial topic. For me it is simple—I can find no precedent in history (including the inflationary 1970s) during which unit costs have risen sharply and yet unit profits have also risen, except in this cycle. Things certainly are different this time,” he wrote in a Wednesday note to clients. 

To back their theory, Edwards and other progressive economists point to evidence from sources like the Kansas City Federal Reserve, which found in a January study that corporate profit hikes accounted for more than half of the inflation in 2021. The Economic Policy Institute came to a similar conclusion about the causes of inflation in an April 2022 article. And now, Edwards is warning that greedflation may have set the U.S. up for a “deeper” and “longer” recession than even the most bearish of investors are anticipating.

“Analysts reveling in companies’ higher margins at the micro level have not realized the macroeconomic implications of greedflation,” he wrote on Wednesday, explaining that rising profits have driven inflation “higher for longer,” which, in turn, will force the Federal Reserve to keep interest rates elevated “and hence the coming recession will be deeper for longer.”

For over a year now Wall Street economists have warned that rising interest rates will eventually bring the economy to a standstill and spark a recession, but so far their predictions have proved—at the very least—to be premature. The unemployment rate remains near pre-pandemic lows, inflation continues to fall from its four-decade high in 2022, and GDP growth was solid in the first quarter. 

Edwards argues that the reason so many on Wall Street jumped the gun with their recession predictions and bearish stock market forecasts was because they failed to recognize the economic impact of higher corporate profits. 

“Although greedflation has resulted in higher for longer interest rates to deal with entrenched inflation, it has also kept corporate profits higher for longer and hence delayed the onset of recession, which would have otherwise arrived much sooner this year. This is one key reason why most economists have been caught out,” he explained, noting that many Wall Street analysts also scrambled to increase their profit estimates in the first quarter “having expected a ‘normal’ profits downturn.”

Is the end of greedflation a recession signal?

While Edwards argued that rising corporate profit margins owing to greedflation have delayed an upcoming economic downturn by keeping earnings elevated, he also warned that “we may still be in a profits down cycle that will cause a recession.”

After surging to record levels in 2021 and 2022, corporate profits have begun to drop in recent months. Total after-tax U.S. corporate profits sank roughly 12% between their peak in the second quarter of 2022 and the first quarter of this year, according to data from the St. Louis Federal Reserve. And Wall Street’s consensus expectations for S&P 500 earnings over 2023 have declined from $250 per share, as forecast this time last year, to just $220 per share today.

While some economists say this profit downturn is the natural result of a maturing business cycle, Edwards believes corporate profits “lead the economic cycle.”

“As corporate profits begin to decline, often due to rising costs and crimped demand, companies subsequently cut investment and jobs in an effort to maintain profitability and/or to improve cash flow,” he wrote. “Profit recessions cause economic recessions and not vice versa.”

There’s clearly some disagreement as to who is leading this dance, but one thing is clear: The recent downward trend in profits is clearly not a good sign for the economy.