As we head into the holidays, part of the season's cheer will be tarnished by the higher prices we'll all pay for holiday festivities. In fact, food, like many goods and services, is costing us more as the flood of dollars unleashed by the federal government diminishes their value, ensuring our money doesn't go as far as it once did. If you're looking for a relative bright spot, count yourself lucky as an American, because things could be worse: Around the world, people generally far less prosperous than those in our own country are paying almost one third more for their meals than they did a year ago. That's a lot more dough for a lot less bread.
With Thanksgiving looming, a relatively easy comparison is made in the price of a turkey dinner with all the trimmings compared to the same feast in 2020.
"Compared to 2020, a 16-pound turkey increased from about $19 to $25 this year," CBS Los Angeles reports. "A 30-ounce pumpkin pie mix is up from about $2 to at most $5.49. Milk increased this year to $3.39 compared to $3.08 in 2020. A box of cubed stuffing is almost a dollar more up from $2.81 to $3.79. The only observed decrease in price was for a bag of fresh cranberries, $2.49 instead of $2.69 last year."
The numbers support the anecdotes. With inflation running at an annual rate of 6.2 percent, according to Bureau of Labor Statistics figures, food prices are up overall by 5.3 percent, with meat, fish, eggs, and poultry (that Thanksgiving turkey being the obvious example) up by a painful 10.5 percent. How about a festive bowl of baked beans, everybody!
Theoretically, higher wages could off-set higher prices if they moved in lockstep across the economy, but they don't. Some members of the media (such as Stephanie Ruhle who is, somehow, NBC News' senior business correspondent) attribute inflation to pressure to pay higher wages to attract workers. "Higher wages are one of the contributing factors to inflation," Ruhle insisted this week.
In fact, though, "real average hourly earnings decreased 1.2 percent, seasonally adjusted, from October 2020 to October 2021," according to the Bureau of Labor Statistics. So, that's not behind the price increases. What's going on?
"The US Federal Reserve and Treasury have printed trillions of new dollars and sent checks to just about every American," comments Hoover Institution economist John Cochrane. "Inflation should not have been terribly hard to foresee; and yet it has caught the Fed completely by surprise."
"I think they're just not recognizing just how much demand is being created by the tremendous wall of money – 15 percent of GDP – in one year that they released last spring," agrees Larry Summers, director of the National Economic Council under President Barack Obama, about the Biden administration's massive spending.
In fact, as early as February, Summers warned "there is a chance that macroeconomic stimulus on a scale closer to World War II levels than normal recession levels will set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability."
Compounding the flood of cheap money is a supply chain broken by a series of government interventions since the beginning of the pandemic, on top of the usual perils posed by nature and accidents. Pandemic lockdowns, bureaucratic hiccups, inflexible rules, and tariffs disrupted production, shifted consumers' needs, and interfered with transportation, making it difficult for sellers to satisfy demand.
"Market economies tend to be pretty good at getting food on the supermarket shelves and fuel in petrol stations, if left to themselves," British economist Philip Pilkington noted last month. "That last part is key: if left to themselves. Heavy-handed interference in market economies tends to produce the same pathologies we see in socialist economies, including shortages and inflation."
Transportation woes may actually worsen with U.S. energy prices up 30 percent, including the fuel needed for trucks that transport goods to market. Diesel shortages have been reported in the U.S. and abroad and that means higher costs for, among other things, stocking supermarket shelves.
As poorly as that bodes for Americans and their food budgets, it's worse for people who live much closer to the edge. Around the world, the UN Food and Agriculture Organization's food price index is up by a whopping 31.3 percent since October of last year. Cereal prices are up by 22.4 percent, dairy by 15.5 percent, and meat by 22.1 percent since October 2020.
Some price elevations predate the pandemic, observes the International Monetary Fund (IMF), which points to an outbreak of African swine fever that devastated much of China' hog herd, which represents half of the world's hogs. But disease, weather, and other natural events are constantly with us, and the dangers they pose are good reasons to not further burden the market interactions that keep us fed. Instead, "early lockdown measures and supply chain disruptions induced a spike in consumer food prices," adds the IMF, which also points to "soaring shipping and transport costs" which themselves largely result from ill-considered interventions.
As troubling as rising food prices in the United States are, especially for lower-income families, soaring prices in less-prosperous places are potentially catastrophic.
"There was a dramatic worsening of world hunger in 2020 … much of it likely related to the fallout of COVID-19," the World Health Organization (WHO) warned in July. "While the pandemic's impact has yet to be fully mapped, a multi-agency report estimates that around a tenth of the global population – up to 811 million people – were undernourished last year."
Again, there were preexisting problems in places, but WHO added that "in many parts of the world, the pandemic has triggered brutal recessions and jeopardized access to food."
As you plan your menu and adjust your budget for the holidays and beyond, you can thank government policymakers for the high prices you pay and the items you do without. But be somewhat thankful that our country still enjoys enough prosperity to insulate us from the worst outcomes of incompetent political meddling in the marketplace. Elsewhere, people are literally going hungry for the same reasons.