I trust that everyone enjoyed a wonderful Thanksgiving weekend. This special time offers us a moment to pause and reflect on our extraordinary existence on this spinning planet, journeying through the vast universe. Despite the challenges that family gatherings can sometimes present, it's a period for gratitude. We express our thanks for the gift of consciousness, the freedom to chase our dreams, and for those who stand by us. Indeed, being alive is akin to winning a cosmic lottery, a marvel both biologically and astronomically.
One thing I am not thankful for is, wait for it, inflation. I am not thankful for various media outlets making broad claims not based in fact for political gain. This outlet, Macrosat, aims to be apolitical, letting the inflation data speak for itself. As we've seen time and time again, inflation is a bipartisan decision to finance the overconsumption of Americans. Here is a headline that irked me:
Here is the excerpt:
But not everything costs more.
A Thanksgiving dinner this year will gobble up less of your wallet, thanks in large part to lower turkey prices. According to the American Farm Bureau Federation, the average cost of a dinner for 10 people will be $61.17, down 4.5% from last year’s record of $64.05.The findings come from a survey conducted Nov. 1 to 6, with the agricultural advocacy group’s members checking prices at grocery stores in the 50 states and Puerto Rico. Almost everything on the Thanksgiving menu is lower – prices for cranberries have dropped 18%. But the main reason for the decrease is due to the star of the show — the turkey. This year, a 16-pound turkey is averaging $27.35, down 5.6% from a year ago. This is especially welcome news, as turkey prices shot up 50% between 2020 and 2022 – though they remain 30% higher than 2019, before the pandemic, which many consider a baseline.
So this claims that turkey is down 4.5% from last year, which may be true. Later on, you see the article state that prices are still 30% higher than before the pandemic. That's where the confusion usually comes in. Headlines like "Turkey prices coming down" is misleading. Generally the price decreases are either 1) temporary or 2) cherry picked statistics to create the illusion of cheaper goods and services.
As we see the data below from the St. Louis Fed: turkey in fact never decreases especially when taking a long term view.
In fact, it looks like the price of turkey has gone parabolic compared to nominal wages. Remember, I used 'nominal' instead of 'real' wages so that we don't adjust for inflation. Both turkey prices and wages are not adjusted for inflation so you can see the actual rate of the increase, which is the most important part.
When the line for nominal wages is layered in (in white), you see the huge discrepancy starting around 2016 in which food items and other commodities started to get way more expensive relative to how much people earned.
This comparison is critical as the numbers on their own don't tell the whole story. Looking at the trends over time is how you see the facts. Turkey has in fact not gotten cheaper for people.
Here is one more chart from last week that unfortunately didn't get pasted to the email correctly. It was the total CPI from 1947-2023. Inflation never goes down meaningfully over an extended period of time, only the rate at which it increases is what changes:
I'll leave you with this quote from the textbook "Monetary Regimes and Inflation" by Professor Peter Bernholz:
Inflation in historical terms is still largely about the behavior of the money supply and the varieties of political and other institutions from which monetary policy emanates.