Economists Release Revolutionary Economic Indicator: the TEI

Economists at Perdue University have recently released a new system for measuring the stability of the economy, the Turkey Economic Indicator. Named for the Thanksgiving season's dinner-time staple, the TEI examines minor shifts in consumers buying habits around the holiday season.

"The media and the Fed have been so concerned with consumers and the fate of durable goods, like cars or homes, that they have forgotten to look at the everyday cutbacks people make to save money," explains Professor Mashamar Yamerts, who initiated the research behind the development of the TEI. "Changes around the holiday season are perhaps the most telling about the stability of our economy as a whole."

Thanksgiving is a time of family and feasts and is not typically a day when people concern themselves with moderation. "If people are cutting back at Thanksgiving, you can bet they are cutting back on all consumption."

Furthermore, the recent trend in organic, free-range and cruelty-free food products has resulted in an increase in the average family's annual expenditure on grocery items. But the TEI, which measures changes in the sale of grocery items and in particular the changes in the sale ratio of conventional to organic/free-range turkeys, shows that many consumers are shying away from the all-natural food trend.

Buyers for grocery chains like Whole Foods and A&P anticipated another increase in demand for organic birds for the 2008 season. "Last November and December, we oversold the number of organic turkeys our suppliers could provide for us," recounts a Whole Foods store manager, who requested to go unnamed. "It was a disaster. Who would imagine an organic turkey shortage? To get ready for this year, we preordered 100 more organic birds for our store. But we saw nothing near last year's demand for this type of turkey. It looks like we're going to be offering a lot of discounted Moroccan-turkey salad in our prepared food bar for the next few weeks."

The TEI saw the percentage of organic turkeys purchase drop 5% in 2008, well below 2005 levels. It appears people have gone back to their Butterballs or their store brands in the face of economic uncertainty. "Consumers can save upwards of $10-20 dollars, depending on the size of the birds, by giving up the organic or free-range label." And when consumers are hosting a house full of in-laws and third cousins, every dollar saved on a turkey is another dollar for post-party dry-cleaning bills.

Yamerts and his colleagues noted a few other changes in consumer grocery spending this Thanksgiving. The sale of marshmellows and yams also declined while white and Yukon-gold potatoes saw an increase of 2.3% in sales. It appears as though consumers who once considered baked yams with mini-marshmellows a holiday staple have decided to switch out one root vegetable for another, replacing the sweet yam dish with simple, old-fashioned mashed potatoes. Again, Yamerts chalks up the change in traditions to price points. The average price of a pound of yams is $1.82, while potatoes typically come in under $0.70 a pound. Additionally, the higher number of ingredients needed to make the baked yams brings the average price of this side dish to about $2.00 a person. Mashed potatoes usually only require standard pantry/fridge items and thus tend to cost about $1.00 per person.

Yamerts considers his study to be revolutionary, but he acknowledges that the TEI can not make real economic forecasts until early 2009 when researchers have the grocery receipts from the Christmas, Hanukah, Kwanza and New Years food and liquor buying rush. Once these numbers are collected and evaluated, Yamerts, et al., will turn their sites to the Easter and Passover holidays when they begin compiling data for the M-CBEI (Matzo/Chocolate-Bunny Economic Indicator).