Is Your Thanksgiving Dinner the Benchmark?

Good news! Your Thanksgiving dinner will be -3.3% cheaper than it was last year!^[i] At least, that is what the annual cost-of-feasting indexes claim, with charts showing all the trappings of a traditional Thanksgiving dinner easing a bit as the ingredients get cheaper. It is all fun and nice, but there is a wee problem: These indexes often don’t reflect people’s real-world experience. Nor are they designed to. Whether it is a Thanksgiving dinner index or a full-blown consumer price index (CPI), these things track broad, national trends in a given basket of goods and services. They aren’t, and aren’t designed to be, cost-of-living measures. So when your experience inevitably doesn’t square with the CPI or a more fun index like this one, don’t sweat it. Nothing is broken.

To see how this works, let us go through one flagship report: Expana’s Thanksgiving Dinner Index. This is actually three indexes in one—the headline measure plus its subindexes, the Thanksgiving Main Meal Index and the Thanksgiving Pecan Pie Index. The Main Meal Index, happily, is down -6.6% y/y.^[ii] But the Pecan Pie Index, maddeningly, is up 8.0% y/y.^[iii]

But does this mean everyone’s dessert is more dear this year? What if you aren’t a pecan pie household? What if you are pumpkin? Apple? Cherry? Pear frangipane tart? A dessert index consisting of pecans, sugar, vanilla, butter and eggs will not be so relevant to the non-pecan-pie-eating crowd. Of these ingredients, the fruit pie folks would care only about sugar and butter … and they would wonder about spices, fruit and—presumably—flour for the crust. The pumpkin pie folks would fold in eggs, along with cream and vanilla. To all of them, pecans’ 8.6% y/y rise would be irrelevant.^[iv] The steep double-digit drops in vanilla, sugar and butter would be more meaningful, but then we are left with big fruit-shaped holes.

But this is all just national averages. They are handy benchmarks but not necessarily representative of what you will find at your local market. Case in point: Sugar is down -14.0% y/y, but this is based on spot prices in futures markets.^[v] There are a lot of supply chain links between futures prices and your grocer’s baking aisle. Did your grocer save on wholesale costs? Did they pass those savings on? Did you manage to stock up the day sugar was on sale? Did it even go on sale, or did your grocer need to keep sugar high to subsidize shakier parts of the business? Chances are, it all varies from person to person, store to store.

We can play this same game with bread. The Thanksgiving Bread Index is down -5.7% y/y, based on price movement in wheat, yeast extract, butter and salt. Perhaps your favorite tasty loaf is -5.7% cheaper. Or, if you make your own sourdough—using just flour, water and salt—you might find it costs the same as last year, due to flat flour prices (yes, we passed on a joke about bread prices failing to rise). If you like buying a crusty artisanal loaf from your local baker, it could be more expensive to help cover their higher operating costs. They might eschew butter in favor of a traditional, non-enriched dough, so butter’s average -13.0% y/y price drop wouldn’t factor in.^[vi]

The main meal is probably the most obvious example of all. The index presumes you build your meal around a turkey or a ham. Now, here we award major points for not assuming every American household gobbles a gobbler on Thanksgiving. Cheers to that! But not every non-turkey household picks a ham. Over the years, your friendly MarketMinder editors have also served up roast beef, brisket and full-on Texas barbeque. One article this week told us oysters are an increasingly popular choice. But if that is you, then a Thanksgiving meal index probably isn’t your … oyster. (Sorry.) You might have … beef with it. (Our sincere apologies.) Even if you are a turkey or ham devotee, you might find your particular bird or haunch doesn’t match the national average price, which the index quotes. Averages are made up of extremes. Your local butcher may be an outlier. The rancher at your farmers’ market will use their costs, not national averages, to set prices.

The side dishes seal our point. The Main Meal Index includes potatoes, sweet potatoes and carrots, all at national average prices. So even if these are your sides of choice, your local prices may not match the average. And if you serve up green beans? Brussels sprouts? Wild mushrooms? Leafy greens? A refreshing salad? Alas, you will not find your costs here.

Oh and stuffing? Absent. Cranberry sauce? Missing in action.

Look, we aren’t knocking this report. We enjoyed every word of it! It is fact-packed and teeming with updates on food supply, farming trends and other things our nerdy little hearts can’t get enough of. It is glossy and colorful and great fun, and the pictures made us hungry.

But it is a gentle reminder that no index, no matter how thoughtful or broad, will perfectly capture any household’s cost of living. Just as your Thanksgiving dinner probably isn’t turkey, ham, bread, potatoes, sweet potatoes, carrots and pecan pie, your annual household spending probably doesn’t look a lot like the CPI basket. If your house is paid off, the 36.2% of CPI devoted to rent and owner’s equivalent rent doesn’t apply to you.^[vii] If you have an electric vehicle, you probably don’t care about the 3.4% of CPI devoted to motor fuel, and electricity is probably more than 2.4% of your spending.^[viii] College tuition is just 1.3% of CPI, but anyone paying this right know will attest that it is much, much more than 1.3% of their annual budget.^[ix]

We could go on and on, but you get the point. These are all broad averages to help illustrate trends and aid policymakers. When they don’t match your personal experience, it doesn’t mean they are broken or wrong. It just means you aren’t broad and average.