The Turkey-Inflation Goblin

Supply and demand is lost on the WSJ editorial page

Speaking of The Wall Street Journal editorial page, its Opinion Journal Live is looking for signs of runaway inflation to support its tight-money stance, and it’s finally found it:

We keep hearing that inflation has not gotten out of control despite all the Federal Reserve’s money creation over the last few years, but there’s at least one place where you’re seeing pretty substantial inflation.

That place is the Thanksgiving dinner table.

Turkey prices are soaring from a year ago, as are prices for T-Day essentials like pumpkin filling and whipped cream. That means the cost of an average Thanksgiving Day meal is up 13 percent over last year, as we learn from an American Farm Bureau press release that’s been rewritten hundreds of times this week.

“That’s what anyone would call runaway inflation,” says the Journal’s “Golly, shucks!” anchor-type person, who pronounces it “scary” and asks, “Is this a preview for the economy in a short time?”

The Journal edit-page types would like you to believe that this increase is wholly a monetary phenomenon. Unfortunately for them, we have the paper’s news side reporting that it’s an, uh, supply-side issue. Turkey farmers aren’t producing as many birds in large part because there wasn’t enough money for them during the crash.

The turkey industry really got nervous and said, ‘Let’s be very, very careful,’ ” said Paul Hill, a central-Iowa turkey grower and chairman of West Liberty Foods, a farmers co-op.

Behind that caution is the trauma of the downturn, which still lingers for Kent Meschke, a Little Falls, Minn., turkey farmer. In the 2008 slump, Mr. Meschke’s bank wouldn’t give him the operating loan to buy the corn he needed, so he had to refinance his home to feed his birds and keep his operation running.

That means there are 8 percent fewer turkeys than in 2008, according to the WSJ news side. Meantime, demand for turkeys is up.

If we ate chicken, Thanksgiving would be a whole lot cheaper: Chicken prices are down 10 percent from last year.

The declining price of chicken shows how focusing on Thanksgiving food prices is cherry-picking. Those prices, mainly for turkey, are up quite a bit, although not uniformly (sweet potatoes are up just 2 percent and cranberries 3 percent, while a “1 pound relish tray” of carrots and celery is down 1 percent), while non T-Day other prices aren’t up nearly as much.

Food prices overall are expected to end up between 3.5 percent and 4.5 percent this year (much of it due to the price of fuel), according to the UDSA, as WSJ columnist Mary Anastasia O’Grady does tells us. She reports that this is the highest food-inflation rate since 1978, but doesn’t say that last year’s inflation rate was the lowest since 1962. Food prices are volatile. That’s why economists typically focus on core inflation, which O’Grady pooh-poohs. To show how this plays out: Prices actually rose faster in 2007 and 2008 than they will this year, according to the Consumer Price Index, and declined in 2009.

The USDA projects next year’s increase to be between 2.5 percent and 3.5 percent, another fact the Journal edit page elides in its bid to hype inflation.

So enjoy your turkey, even if it does cost nearly 20 percent more this year. It’s hardly a harbinger of Weimar-style hyperinflation.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at Follow him on Twitter at @ryanchittum. Tags: , , , ,