|It’s going to be an expensive Thanksgiving dinner this year for Americans – but that’s not the fault of the Biden administration or the Federal Reserve. Put the problem down to a series of mostly unrelated exogenous events, from bird flu to (possibly) climate change.
This year, a homecooked dinner for an average family of 10 will ring in at $81.30, up a stunning 18% from last year’s $68.72. Every single ingredient will cost more, except for cranberries. (Don’t ask me why!) The largest percentage increase will be in the cost of stuffing (up 69%) while the largest increase in dollars will be in the price of the turkey ($5). With turkey being the most expensive part of Thanksgiving dinner, the higher turkey prices will account for fully one-third of the overall greater cost. Many other items – from pumpkin pie to dinner rolls – will be more than 20% up from last year. (Ham will be a relative bargain, up only 7.1%)
As mentioned, a number of heavily idiosyncratic events can be blamed. For example, avian flu has struck our poultry population, affecting more than 50 million birds, 8.1 million of them turkeys. (To put that in perspective, 46 million turkeys are consumed on a typical Thanksgiving, so the flu may kill nearly 20% of that total.) Perhaps more significantly, the extraordinary weather conditions of recent years has led to the greatest drought problems in many years. Almost 70% of U.S. land area is currently experiencing drought conditions, up from 20% just three years ago. The U.S. has experienced periods of drought like this before, though climate change is likely making them more regular and intense.
The consequences for American farm products are severe. In Idaho, for example, last year’s wheat crop was down 32% from 2020 levels. The continued drought has led to water levels on parts of the Mississippi dropping to all-time low levels. That, in turn, has caused barge prices to as much as quintuple from last year, very problematic given the huge dependency on water transportation, particularly for agricultural exports. Then there’s the war in Ukraine; that country is a major grain producer and exporter. With Ukrainian wheat production down 40%, overall global wheat output has fallen 7.4%. As a result, the global price of wheat was up 28% in September, compared to a year earlier, and flour prices are up 48%. That’s why stuffing, rolls, pies and everything else made with flour are so much more expensive.
Consider the impact on American families. For Americans earning only the minimum wage, they will have to work 8 ¾ hours to pay for dinner. That’s up sharply from last year and is now above where it was in 1986 (after years of declines in between). For an average family, the news is slightly better – “only” 2 1/3 hours of work, up from 2 hours last year but below the 3 ¼ hours required 36 years ago.
All that said, on a modestly more hopeful front, food price increases have begun to moderate. After peaking at more than 40% in 2021, the rate of increase has slowed to just 2% in October and prices will likely drop in November, the first decrease since July 2020.
Steve Rattner’s Morning Joe Charts: Inflation Eats Thanksgiving Dinner
November 23, 2022