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Economics

At Least Thanksgiving Is Cheaper This Year

Mark J. Perry

 

From the annual report from the American Farm Bureau Federation on the cost of a classic holiday meal, “Thanksgiving Dinner Ticks Down to Less Than $5 Per Person”:

The American Farm Bureau Federation’s 31st annual informal price survey of classic items found on the Thanksgiving Day dinner table indicates the average cost of this year’s feast for 10 is $49.87, a 24-cent decrease from last year’s average of $50.11. The big ticket item – a 16-pound turkey – came in at a total of $22.74 this year. That’s roughly $1.42 per pound, a decrease of 2 cents per pound, or a total of 30 cents per whole turkey, compared to 2015.

“Consumers will pay less than $5 per person for a classic Thanksgiving dinner this year,” AFBF Director of Market Intelligence Dr. John Newton said. “We have seen farm prices for many foods – including turkeys – fall from the higher levels of recent years. This translates into lower retail prices for a number of items as we prepare for Thanksgiving and confirms that U.S. consumers benefit from an abundant, high-quality and affordable food supply.”

The AFBF survey shopping list includes turkey, bread stuffing, sweet potatoes, rolls with butter, peas, cranberries, a veggie tray, pumpkin pie with whipped cream, and coffee and milk, all in quantities sufficient to serve a family of 10 with plenty for leftovers. “Due to a significant expansion in global milk production, prices fell to the lowest levels since 2009, leading to lower retail milk and dairy product prices. Additionally, this year’s pumpkin prices are slightly lower following the production decline and higher prices seen in 2015,” Newton said.

The average price is down slightly from last year to $49.87. After adjusting for inflation, the cost of a Thanksgiving dinner fell is the lowest level since 2010.

Although the classic Thanksgiving meal priced by Farm Bureau is considered modest by some, “we’re fortunate to live here in America, where many people are able to enhance their holiday meals with another type of meat or additional side dishes or desserts,” Newton said.

A total of 148 volunteer shoppers checked prices at grocery stores in 40 states for this year’s survey. Farm Bureau volunteer shoppers are asked to look for the best possible prices, without taking advantage of special promotional coupons or purchase deals, such as spending $50 and receiving a free turkey.

Some comments:

1. Compared to the cost last year of $50.11 for a classic Thanksgiving Day dinner for 10 people, this year’s cost of $49.87 is about 0.50% (and 63 cents) lower (see dark blue line in top chart). That compares to increases over the last year of 1.65% for overall consumer prices and 2.4% for average hourly earnings.

2. The average price for a 16-pound turkey this year ($22.74) is 1.3% (and 30 cents) lower than last year’s price of $23.04, and the prices of other food items on the menu that fell from last year are pumpkin pie mix (-2.2%), milk (-2.5%), relish tray (-7.6%) and miscellaneous ingredients (-8.6%). Prices increased compared to last year for whipping cream (3.1%), green peas (3.9%), cranberries (4.4%), sweet potatoes (+0.8%), cubed stuffing (+2.3%), pie shells (+4.9%) and rolls (+9.3%).

3. Adjusted for inflation, the cost of a classic Thanksgiving dinner this year is 1.7% less expensive than last year, and the lowest since 2010 (see light blue line in chart).

4.Compared to the cost of a Thanksgiving dinner in 1986 of $62.84 (in 2016 dollars), today’s classic turkey dinner is 20.3% cheaper at $50.11 this year.

5. Measured in time worked at the average hourly wage for all private production workers of $21.72 in October 2016, the “time cost” of this year’s classic turkey dinner is only 2.29 hours, down by 3.0% from 2.37 hours last year and at the lowest level since 2010. Compared to 1986 when the average American would have worked 3.21 hours to earn the income necessary to purchase the turkey dinner for 10, the “time cost” for a worker today (2.29 hours) is nearly 29% lower.

Note:

The average worker would earn enough money before their lunch break on just one day to be able to afford a traditional Thanksgiving meal.There is criticism every year that the AFBF’s classic Thanksgiving dinner menu wouldn’t really be enough food for 10 people. In that case, let’s say it’s more realistically a dinner for 4 or 8 people, or whatever number you thinks is more realistic. Whether it’s a Thanksgiving dinner for ten or one, the important point is that the AFBF determines the retail prices for a fixed basket of 12 food items every year and compares those retail prices over time. Call it a “Classic Thanksgiving Meal for X People,” and choose your own X – the comparison of the cost over time wouldn’t change!

 

According to the AFBF: “The Thanksgiving dinner survey was first conducted in 1986 and the survey menu has remained unchanged since 1986 to allow for consistent price comparisons.”

Bottom Line:

The fact that a family in America can celebrate Thanksgiving with a classic turkey feast for less than $50, and at a “time cost” of only 2.29 hours of work at the average hourly wage for one person, means that we really have a lot to be thankful for on Thanksgiving: an abundance of cheap, affordable food. The average worker would earn enough money before their lunch break on just one day to be able to afford the cost of a traditional Thanksgiving meal. Compared to 1986, the inflation-adjusted cost of a turkey dinner today is more than 20% cheaper, and nearly 29% cheaper measured in the “time cost” for the average worker. Relative to our income and relative to the cost of food in the past, food in America is more affordable today than almost any time in history.

Bon appetit!

This first appeared at AEIdeas

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