- Happy Thanksgiving!
- Be thankful the cost of Thanksgiving dinner is down in 2023.
- Be thankful equities are higher in 2023.
- Be thankful about lower commodity prices.
- Consumer stretched; may be disappointing holiday shopping season.
Happy Thanksgiving! Enjoy a Cheaper Meal this Year
First and foremost, we would like to wish everyone a Happy Thanksgiving this week! As the furor of the holiday season is quickly approaching, we hope that you take time to relax and enjoy this time with family and friends. We thought we would offer some festive facts for your Thanksgiving table. It is welcome news that we are starting to see inflation pressures moderate and as consumers, we can be thankful that the cost of Thanksgiving dinner did not go up this year!
The American Farm Bureau releases a survey each year that calculates the average cost of a Thanksgiving dinner for 10 people. Compared to last year, Americans can expect to spend about 4.5% less on their meals ($61.17 vs. $64.05). Leading the price declines will be the centerpiece for most; the Turkey. A 16-pound frozen whole Turkey will cost an average $27.35, a decrease of ~5.6% from 2022. A decrease in Avian Influenza cases on a year-over-year basis was the largest contributor to prices falling for the Thanksgiving centerpiece. Also helping drive the overall cost decrease for a Thanksgiving dinner is whipping cream and fresh cranberries, which decreased 22.8% and 18.3%, respectively.
In this weekly, we wanted to also offer some additional things we can be thankful for from an economic and asset class perspective.
- Equities have rallied this year!
There may have been some unhappy equity investors at your table last year with the S&P 500 on pace to deliver its worst annual gain since the Great Recession. However, this year investors can be thankful that the S&P 500 is up nearly 20% year to date. While we admit the rally is concentrated in a select number of stocks, every major style or market cap is modestly positive YTD.
- Inflation is still an issue but not as bad as last year.
In November of 2022, the Consumer Price Index was growing 7.1% on a year over year basis, last month inflation had moderated to 3.2% (YoY). The Fed’s preferred inflation gauge, PCE Core, has also slowed from 5.1% last November to the most recent reading of 3.7%. For those flying this year, airfare is down 13% from last year. If you are renting a car, rental car prices are down ~10% since last Thanksgiving and for those driving the price of gasoline is down $0.25 since last year.
- Commodities lower.
The pain Americans felt from the surge in commodity prices during and in the aftermath of the pandemic has eased since last year. The Bloomberg Commodity Index is down 8% since last Thanksgiving. The biggest relief is seen in natural gas prices which are down almost 60% from last Thanksgiving. Declines have also been seen in nickel (-36%), wheat (-31%), corn (-30%), aluminum (-8%) and crude oil (-3%).
The Bottom Line:To get in the holiday spirit, we have highlighted areas of the economy and asset classes that are much brighter this year than last Thanksgiving. However, when it comes to inflation we realize that while prices are growing at a slower pace, they are still growing and the pain is being felt for many in the economy. While a Thanksgiving meal may be cheaper this year, the upcoming holiday shopping season may not be as upbeat. Consumers are stretched with higher interest rates, excessive credit card debt and weak confidence. This may set us up for a disappointing holiday shopping season.
© 2023 Authored by Megan Horneman, Chief Investment Officer, Verdence Capital Advisors, LLC. Reproduction without permission is not permitted. The indexes presented are unmanaged portfolios of specified securities and do not reflect any initial or ongoing expenses nor can it be invested in directly. An investment’s portfolio may differ significantly from the securities in the index. Past performance is not indicative of future returns.
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