As Thanksgiving approaches, the economics of the holiday are in focus. In a recent episode of the Planet Money podcast, hosts Erika Beras and Jeff Guo delve into the economics of Thanksgiving, specifically the mystery of why the price of whole turkeys actually falls around the holidays despite the increased demand. The episode explores the dynamics of supply and demand during the holiday season, shedding light on the factors that contribute to the lower prices of turkeys during Thanksgiving. The episode was produced by James Sneed with assistance from Emma Peaslee, edited by Jess Jiang, fact-checked by Sierra Juarez, and engineered by Josh Newell [1a8f917d].
The Planet Money episode highlights the concept of price elasticity of demand, which explains how changes in price affect consumer demand. During Thanksgiving, the demand for turkeys increases significantly, but the supply also rises to meet this demand. The increased supply, combined with the competition among retailers to attract customers, leads to lower prices for whole turkeys. Additionally, the episode discusses the role of economies of scale in turkey production, as large-scale turkey farms are able to produce turkeys more efficiently and at a lower cost, contributing to the lower prices during the holiday season [1a8f917d].
While the falling prices of turkeys may be a welcome trend for Thanksgiving shoppers, it is important to note that other grocery items have experienced price increases. Shoppers in Houston, Texas, have expressed concerns about the rising cost of groceries, including ingredients like beef and turkey wings. This aligns with U.S. Senator Bob Casey's report on rising prices, which highlighted the higher costs of holiday meal staples like turkey, chicken, and potatoes. The report attributed these price increases to corporate greed and emphasized the need for corporations to pay their fair share [e04857b2] [95a4f583].
Inflation remains a concern not only for American consumers but also for policymakers and economists in both the United States and India. In the US, consumer prices increased by 0.4% in September, driven by higher costs for shelter and a surge in gasoline prices. The core Consumer Price Index (CPI), which excludes energy and food costs, also rose by 0.3%. However, the yearly rate dropped slightly from 4.3% to 4.1% [e7cdc189]. In India, retail inflation for September was 5.02%, compared to 6.83% in August. The cost of cereals and products increased, while the food and beverages basket index fell [e7cdc189].
The impact of rising prices extends beyond groceries to the housing market in the US. The S&P CoreLogic Case-Shiller Home Price Index provides data on home price inflation, with some metros experiencing a decline from their peaks last year while others set new highs. The housing market slowdown is reflected in the Consumer Price Index, which compares to home price inflation. Policymakers are grappling with the affordability issue in the housing market and the need for building and better regulation to address the problem [1548a679] [97e68eda].
As Americans gather for Thanksgiving, the rising cost of groceries and the state of the economy remain key topics of discussion and concern. While the falling prices of turkeys during the holiday season may provide some relief for consumers, the broader context of inflation and affordability issues in the housing market highlight the challenges faced by American households. Policymakers and economists continue to monitor these developments and explore strategies to promote price stability and economic growth.
Farmers receive a small fraction of the price consumers pay for Thanksgiving meal staples. For example, pumpkin farmers get 16 cents for a $1.79 can of pie filling, cranberry farmers get about 30 cents per $2.99 of cranberries, and a 5-pound bag of potatoes priced at $3.99 returns about 60 cents to farmers. Turkey goes through more processing and incurs additional costs. The National Farmers Union is advocating for increased transparency, enforcement of antitrust laws, and new markets for farmers. [63aee522]
The price of turkey has dropped by 5.6% from last Thanksgiving, with a 16-pound turkey now costing an average of $27.35. The article criticizes the media's obsession with turkey-related issues, such as the drama over a manageable rise in the cost of Thanksgiving dinner and a non-existent turkey shortage. It also highlights how some Biden critics have resorted to recycling out-of-date bad news to criticize the president. The article mentions positive economic news, such as the decrease in food inflation, the growth rate of the economy, and the cooling of prices in the US. It also notes that gas prices and air fares have decreased, and new and used car prices have fallen. The author questions why Biden's approval ratings on the economy are low and suggests that the public may be in a bad mood due to concerns about Ukraine and the Middle East. [fe991483]
In March, there is anticipated global uptick in Tryptophan prices, propelled by escalating demands across from end-sectors, escalating shipping costs, and constrained market supplies. The recent spike in demand from these sectors is exerting pressure on the supply chain, potentially leading to price hikes. In China, there is a notable rise in demand for various goods, including amino acids like Tryptophan, which can result in potential price increases due to heightened purchasing activity. Recent data reveals a notable 8.7 percent year-on-year growth in both imports and exports of goods in China during the initial two months of 2024. The U.S. economy exhibited significant momentum at the onset of 2024, buoyed by a stronger-than-expected performance in the fourth quarter. Consumer confidence in the economy surged, potentially driving up demand for various goods and commodities, such as Tryptophan. Consumer sentiment in Germany also improved by the end of the first quarter of 2024, contributing to an increase in Tryptophan prices. According to ChemAnalyst analysis, Tryptophan prices are anticipated to continue their upward trajectory due to sustained demand from downstream industries, coupled with reduced inventories in the market. Central banks in regions such as the USA and Germany may consider lowering key interest rates as inflation moderates, potentially stimulating consumer spending and consequently driving up Tryptophan prices. [f4959b57]