C.J. Lawrence Weekly – Does “Jay” Do the Thanksgiving Shopping?

This week, millions of consumers will finish their shopping for the time-honored American tradition, the Thanksgiving Dinner. If Jerome “Jay” Powell, the Chairman of the Federal Open Market Committee, handles those duties for his family, he’ll find some interesting data to consider, adding to the tame core CPI report released last week. On Thursday, the American Farm Bureau Federation released its survey results for the cost of the traditional Thanksgiving feast. The 33rd annual survey, which measures a consistent basket of items for a Thanksgiving dinner for 10 came in at $48.90, down $0.22 from last year’s survey. After adjusting for inflation, the cost of this year’s Thanksgiving dinner is $19.37, the lowest level in more than a decade.

The shopping list for the Farm Bureau’s survey includes turkey, stuffing, sweet potatoes, rolls with butter, peas, cranberries, a veggie tray, pumpkin pie with whipped cream, and coffee and milk. The quantities measured are enough to serve a family of 10 with plenty of leftovers. The marquee item, the turkey, cost slightly less than last year, coming in at $21.71 for a 16-pound bird. That’s close to $1.36 per pound, down 3% percent from last year. Turkey prices are now at the lowest level since 2014. Other items showing price decreases this year include; a gallon of milk, a 3-pound bag of sweet potatoes, a 1-pound bag of green peas, and a dozen rolls. Items that saw modest increases in prices this year include; cranberries, pumpkin pie mix and stuffing. The survey is consistent with consumer price reports showing that food inflation remains tame.

It’s unlikely that the measured pace of food inflation, and in some cases deflation, will alter the Fed’s current course of near-term rate hikes. But if Jay Powell also stops for gas on his way home from Stop and Shop, he may reconsider the Fed’s plans for next year. Since the beginning of October, the national average unleaded gasoline price is down $0.25 per gallon to $2.57. Given the recent decline in oil prices, gas prices are likely headed lower. The U.S. 10-year treasury bond yield looks to also be questioning the outlook for growth and inflation. Despite strong employment reports and record treasury issuance, the 10-year yield has drifted back below 3.1%. Odds are high that the Fed will raise the Fed Funds target rate at its December meeting. But the bigger question for the equity markets is whether, after giving thanks for lower consumer prices at Thanksgiving, the Fed will be in a gift-giving mood for Christmas. On behalf of our team here at C.J. Lawrence, we wish you and yours a very Happy Thanksgiving!

Thanksgiving Cost Index | Source: American Farm Federation Bureau

Terry Gardner Jr. is Portfolio Strategist and Investment Advisor at C.J. Lawrence. Contact him at tgardner@cjlawrence.com or by telephone at 212-888-6403.

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