Tuesday, November 20, 2007

Can Turkeys Predict the Economic Future?

As we near Turkey Day...I thought it only fitting to do a Turkey Day blog. I don't know if you have been paying attention to the predictions about the US economy lately, the Fed has predicted we will see a downturn in 2008. But I thought perhaps the proof is in the Turkey dinner...

http://www.cnn.com/video/#/video/us/2007/11/20/hunter.turkey.day.costs.cnn

This should get us started thinking and talking about macroeconomics...because after Turkey Day...it just might be all doom and gloom.

Have a great vacation! Gobble, Gobble!

BTW, extra-credit for whoever finds the video of Pres. Bush pardoning a turkey, just another quaint/bizarre? tradition we have for Thanksgiving. This year there were two lucky birds...one named May the other...Flower!

12 comments:

Tyler said...

Ok this is my favorite Bush impersonation of ALL TIME. I know its not Bush pardoning a turkey, but he does say, "Gobble Gobble!" WATCH IT!!! lol.
http://youtube.com/watch?v=ejZ53OmsCIg

The video raises an interesting point by saying that the increase in the price fuel has directly trickled down to consumer good-- most notably, food, and the big bird. However, although surveys might say they are picky this year, turkeys for Thanksgiving are an inelastic good. People will have turkey over ham or chicken, unless then want turducken (hopefully it doesn't get to that point!). The farming industry is subsidized, and only a small percentage of farmers may see a slow dip in profits from this year's Thanksgiving.
As for this serving as a prediction for the entire economy, I think that's kind of silly. The economy lies on so many factors, i.e. stocks, trade, weather, consumer choices, that the inflation of one bird can't predict everything. But it can predict that consumers themselves are spending a bit less-- yet who knows how much less, only this Christmas season will tell.

Ezequiel said...
This comment has been removed by the author.
Ezequiel said...
This comment has been removed by the author.
Ezequiel said...

When fuel goes up everything goes up because all products depend on fossil fuel to be transported no matter what size or shape. I think tyler is right when she says that Turkey (in this time of the year in the United States) is an inelastic good and I think people will buy Turkey no matter what.
Interesting though...

EXTRA CREDIT:
http://www.videonewslive.com/view/15962
/bush_pardons_thanksgiving_turkey

Jamie Ng said...

Well when i click on the link Miss Stephens posted, all i see is something about geothermal energy..

Anyway, the link posted by Tyler is really funny..However, i'm kind of surprised that making fun of the president is acceptable in the US. Freedom of speech i suppose.

So, since Thanksgiving is over, what does the sales of turkey say about the US economy?

Luisa said...

While the video addressed the fact that overall thanksgiving dinner is becoming more expensive than last year, it also points out that its not all due to the rising oil prices and the possible recession of the US economy. The video also points out that some foods used in thanksgiving dinners are more expensive this year because of weather (such as the yams). So in response to jamie's question abotu turkey sales and tyler's comment about turkeys being an inelastic good, its not very reliable to predict the position of the US economy based on the sales of food alone. The price of food can be affected by many factors, and it does not necessarily reflect the state of the economy.

extra credit:
http://www.youtube.com/watch?v=RC3MPL9bbxQ

thats ridiculous btw

Debora said...

aaaaaaaaaaaaaaaahhhh
me and jamie ALWAYS have the same problem!!!
i clicked on teh video and i only see the video on how sharif returned to pakistan..
which is itneresting but haha i cant see teh turkey video!!

but yea, its everywhere how the dollar will be losing power. and i do agree with tyler when she says that its kind of silly how they predict the entire economy based on thanksgiving servings. I dont know, maybe its because I dont fully undersatnd the thanksgiving tradition and exactly how BIG it is in the States, but i really agree with tyler when she says Christmas seasn will tell better when its presents timeee!

emilie said...

The thanksgiving dinner went up 11% for various reasons which in a way, all connect. For example, the yams were caused by bad weather in North Carolina. Turkeys went up because of an increase in transportation costs (due to an increase in gas prices). This is a clear demonstration of input costs and how the Factors of Production and goods and services all interconnect. It is almost like a domino effect because one increase can lead to another increase in price. And because there was an increase in the price of necessities such as yams, cranberries and turkey, the price of a Thanksgiving dinner as a whole increased.

Jamie asked why this predicted the US economy for the future. Americans judge the economy by how much people spend during the holidays (meaning the time period from Thanksgiving to Christmas). If people spend a lot on Christmas presents, food and whatnot, it means that they are secure financially and prepared for the year ahead. But if consumers don't spend a lot, it means they're hesitant about the economic state of the US. I think Americans should be hesitant about 2008. Gas prices are increasing, the war in Iraq is still going on, and costs for everything seem to be increasing. I think the cutback during Thanksgiving is a foreshadowing of what's to come in 2008.

matt--- said...

On most holidays many goods can become inelastic...every year after christmas theirs huge sales because they know knowone will be buying anymore after the holidays...if turkeys are an inelastic good during thanksgiving and i think people will buy turkeys no matter what...

Dante said...

Ok... I see how this holiday can be an insight to the future of the US economy. It gives a picture of the confidence the consumers have in an economy, but still I belive Thanksgiving is too small a holiday to base this prediction on, it is a holiday that focuses mainly on the agricultural and food market and a change in consumer confidence in this areas does not give a big enough picture. The real insight I belive will come durring Christmas and the success of the retail industry durring this holiday season.

Anyway, a presidential pardon to a turkey? lol.. who comes up with this!

Nicolas said...

No matter what the price may be of turkey, Americans will buy it in order to celebrate Thanksgiving. I myself while in teh States for Thanksgiving, did eat turkey... The fact that its a tradition does make it an inelastic could, maybe one could say its an addiction for one day of teh year... jajaja

carl said...

While the prices of food have gone up, but the portions have also gone up. Each year you see larger and larger turkeys. Now, have the portions gone up as much as the prices? No, but even so, basing predictions about the entire economy based off of turkey prices seems somewhat strange. As emilie said, part of the increase was caused by unforseen events, such as storms in NC, and increases in Oil prices. Both of these events could prove to only have short term effects, making their usage as predictors of the economy somewhat illogical.

This brings up the basic problem with all economic forecasts. There are so many variables in both the short range and long range that predicting anything can be extremely difficult