Above is a chart of the YOY percentage change in food prices. Notice the last five times that food prices have advanced more than 7.5% on a YOY basis a recession has followed. You could argue that this time is more like the spike which occurred after the 2000 recession, when prices advanced quickly from an incredibly low reading, which exacerbates the following spike. However, that spike could still be a reason why the early part of the last expansion was so slow (in 2002, the rate of GDP growth on a quarter to quarter basis was 3.5, 2.1, 2 and .1, respectively).
However, there is no arguing that higher food prices are clearly a current economic issue which will be putting downward pressure on consumer spending for foreseeable future. Now the question becomes, will this continue?
Here are three charts of the major grains (wheat, soy and corn):
After a strong advance, all are now moving sideways in one form or another. So while price increases have stalled, there has been little in the way of downward pressure on grain prices.
Energy price spikes get a lot of publicity; not so much for food prices. Yet the information above says food prices are crimping consumer spending with little chance for a meaningful drop in the near future.
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The Bonddad Economic History Project
At the beginning of 2012, I decided to start looking at the actual, statistical history of the US economy starting in 1950. The reason is simple: to find out what really happened. So, when you see title of a post that begins with a year such as 1957, followed by "employment" or "Fed policy: you know what it's for. You can also access the information by typing in BE for Bonddad econ and a year to find information on a particular year.
Here is a link to pages that contain links to all the posts on the years listed.