According to the American Farm Bureau, the price of a Thanksgiving dinner for 10 is actually 44 cents less than last year. The report points out that the home-cooked Thanksgiving dinner works out to less than $5 per person, which is less than most fast-food value meals. Affordable food prices represent good news for American consumers as we start the holiday season. Adding to the good news for home owners, housing prices are up about 6% across the country. Many Americans will feel a little bit wealthier this holiday season as their biggest asset has appreciated and costs – for Turkey at least – stay low.
Ironically, falling prices are exactly what central bankers around the world are trying to avoid. The immediate focus is on keeping rates low to stimulate the economy, increase growth and reduce unemployment. A global concern is that, though unlikely for the U.S. at this point, a trend of falling prices can actually hinder consumption and growth. With the recent news coverage of the Federal Reserve and monetary policy, some people may find it hard to reconcile concerns about deflation with high prices in their areas. Recently I reviewed some data showing how prices are varying quite a bit for dinners – Thanksgiving and otherwise – at tables around the country.
Using prices for chicken as a stand-in for turkey, I compared prices for cities around the country. There is clearly a huge difference in the prices that families will pay for their Thanksgiving dinner across the country. These changes show differences in cost of living between cities. Differences in the cost of living across the country persist, and local inflation rates vary, even as overall U.S. prices are stable. Prices in Hartford, New Haven and Honolulu were more than 50% above the national average. Prices in Waco and Kalamazoo were around 20% below the national average. Below I listed the top 5 and bottom 5 areas of the country.
Many of the cities that have had high annual home price appreciation also had high prices for chicken. Prospective homebuyers in these areas may feel the opposite side of the wealth effect, as both housing and food are increasing rapidly at the same time.
