Posts Tagged ‘Disposable income’

Thanksgiving Dinner to Cost 13 Percent More This Year

Wednesday, November 23rd, 2011

This year’s Thanksgiving dinner on average will cost 13 percent more than it did in 2010. The price of the traditional holiday meal for 10 people will average $49.20, an increase from $43.47 in 2010, according to the American Farm Bureau Federation (AFBF).  That’s the biggest increase since 1990, as the cost of sweet potatoes, rolls, stuffing and whipped cream rose in 2011.  The classic Thanksgiving meal totals approximately $5 per person.

Bad weather and soaring commodity prices are two reasons that have caused an increase in food and beverage prices.  On Thanksgiving Day, a 30-ounce can of pumpkin pie mix will cost 16 percent more than it did last year.  A pound of frozen green peas will cost 17 percent more, while the cost of a gallon of milk will climb 13 percent.

The turkey itself will be the biggest item.  A 16-pound turkey is expected to cost approximately $21.57, or 22 percent more than in 2010.  Economists said the leap is a result of strong demand in the U.S. and abroad.  “Retailers are being more aggressive about passing on higher costs for shipping, processing and storing food to consumers,” John Anderson, a senior economist with the group, said.  The report, which the federation says is “an informal gauge of price trends around the nation,” is the latest in a series that date back to 1986.  Back then, Thanksgiving dinner cost $28.74.

“Our informal survey is a good barometer of the rising trend in food prices this year,” Anderson said. “We are starting to see the supply response to higher prices, but there are substantial lags.”

Thanksgiving dinner costs have increased at a faster pace than food inflation; the government forecasts prices will increase 3.5 to 4.5 percent this year, the fastest rate since 2008.  Rising commodity and energy prices boosted the cost of food by 6.3 percent in September compared with the same timeframe of 2010, according to Census Bureau data.  “The era of grocers holding the line on retail-food cost increases is basically over,” Anderson said.  “The worst of the price inflation may be ending, and we should see a moderation in 2012.”

At a time when global food prices tracked by the United Nations fell 9.1 percent from a high point in February, Americans are paying record prices, including on hams, ground beef, bread, flour and cheese.  World food costs are 68 percent higher than five years ago after bad weather the past three years hampered global production gains.  “We are still in a period of accelerating food inflation that may begin to moderate in 2012,” Alexander said. “Consumers are getting a double whammy.  It costs more to get to work, and they have less disposable income to spend on other things after they go to the grocery store.”

A total of 141 volunteers from 35 states participated in this year’s project.  The dinner menu has remained unchanged since 1986 to assure consistent price comparisons.  “A dinner for 10 at under $5 a head is still a bargain,” Anderson said.  “The average American household still spends less on food than any other nation in the world.”

Handicapping the 2012 Presidential Race

Monday, July 18th, 2011

Conventional wisdom tells us that no sitting president is ever re-elected when the unemployment rate tops seven percent and people have less disposable income.  Others wonder if President Barack Obama should have taken on housing reform before tackling healthcare because home ownership and the value of the residence is perceived by Americans as a measure of personal wealth.

In the opinion of Douglas Hibbs, a retired economics professor who taught at the University of Gothernburg in Sweden, “The best predictions of 2012 election results, as of earlier elections, will almost surely be delivered by price data at thick-market betting sites like Intrade because they indicate the level of disposable income.

Writing in The New Yorker, Samantha Henig says that “The Republican field may be full of Eccentrics and Implausibles, but President Obama does have a formidable foe in the economy, Elaine Kamarck, a lecturer at Harvard’s Kennedy School of Government, says.  The President also has to contend with Americans’ newfound belief, stemmed from the economic disaster in Greece, that ‘deficits are the roots of all economic evils.’”

Alan Abramowitz’s “Time for Change” model tries to achieve this task.   Using 2nd quarter GDP growth in the election year, presidential approval in the election year, and a dummy variable (one or zero) for whether the party in the White House has completed one or more terms, he finds that the term variable is very important.  President Obama is expected to win 4.4 percent more of the popular vote than he would if his party were in its second term in the White House for a projected percentage between 53 – 54 percent.

The fact that President Obama raised a record-breaking $86 million for his re-election campaign from April to June, exceeding a $60 million quarterly target and effortlessly surpassing all Republican challengers, lends credibility to Hibbs’ and Intrade’s prognostications.  Small donations drove that enormous cash collection in the 2nd quarter; 98 percent of those donations totaled $250 or less.  The average donation was approximately $69, according to campaign manager Jim Messina.  Obama’s campaign received donations from more than 552,000 individuals and noted that it had “more grass-roots support at this point in the process than any campaign in political history.”  According to Chris Arterton, a political management professor at George Washington University, “They have smashed all records.  I think it is quite dramatic.”

The President’s successful fundraising likely surpassed that of all his declared opponents.  Combining the known fundraising totals, Republican candidates brought in $35.5 million.  Former Massachusetts Governor Mitt Romney raised a paltry $18 million in the quarter.  “We did this from the bottom up,” Messina said.  “We didn’t accept one single dollar from Washington lobbyists or special-interest PACs.”

The ability to raise campaign cash,  a key indicator of the success of any presidential candidate, is more important in the 2012 presidential election, which is expected to be the most expensive in history.  Quarterly fundraising statistics are a closely watched barometer of early-stage presidential races because they offer clues to a candidate’s long-term viability, organizational expertise and the enthusiasm among supporters.  The enormous intake of campaign cash for the president comes as the importance of having an effective fundraising operation is greater than ever, in part because of the 2010 Supreme Court Citizens United decision that lets corporations and unions exercise free speech rights by spending unlimited amounts on campaign ads.  President Obama, who filled his 2008 campaign coffers with millions in small donations, is now armed with the power of incumbency, and is likely get sizeable donations from corporate and establishment donors.

“Your early support means we can make more investments now, giving our organizers more time to build relationships on the ground, reach more people and recruit more volunteers,” Messina said. “The most important thing isn’t the dollar total, but the number of people who pitched in to own a piece of this campaign.”