Housing and food now take up about half of what Americans spend, the highest share in 15 years. In this interview, Dr. David P. Anderson, professor and extension economist for livestock and food product marketing at Texas A&M University’s Department of Agricultural Economics, explains what’s behind the squeeze. Jeffrey Snyder, Broadcast Retirement Network Well, Dr. Anderson, it’s so great to see you. Thanks for popping by the program this morning. David Anderson, PhD., Texas A&M University Hey, it’s great to be with you. Jeffrey Snyder, Broadcast Retirement Network It’s a pleasure and always great to talk to a seasoned economist like yourself, especially one that knows beef prices and food prices. We’re going to talk about that in a couple of minutes. This first story, though, I wanted to immediately when I saw it, I wanted to talk to you because based on survey results, half of American spending goes to housing and food, and that is the highest it’s been in the last 15 years. I want to get your reaction to that top line, then maybe we can kind of look into it a little bit further. David Anderson, PhD., Texas A&M University Yeah, you know, that’s the kind of the stuff we have to have, right? A place to live and something to eat. And, you know, particularly on the food side, for many years, you know, we look at the data, the statistics, we tout that as Americans, we spend the smallest percentage of our income on food of any country in the world. And oftentimes that has run between seven to 9% or so. And, you know, which means that we have a lot more income to spend on other things that drive so much else in the rest of the economy. We could look at other countries, less developed countries, even other countries on par with us. They all spend more of their money on food. I had my class earlier this semester read an article that actually came from some data, some research from Ethiopia. And of the people in that survey, they were all farmers. Some were bigger farmers, smaller farmers, had excess crops to sell, but also produced for home consumption. And when you added it up, they were spending about 80% of their income on food, which doesn’t leave much money for anything else. And so we’ve been very blessed to have really throughout for many years, really low food costs, which give us the freedom to do other things. Jeffrey Snyder, Broadcast Retirement Network Yeah, I think that’s a really good point. And of course the headline points to inflation. I don’t think anyone can argue that food prices have gone up in a lot of cases. I want to talk about beef in a few minutes, but food prices have gone up. These are the gasoline prices that have gone on. Diesel has gone up. Lease, you know, real estate has gone up. The other part of that, that I wanted to ask about, and maybe this isn’t within your, maybe it is, maybe it isn’t, but like let’s talk about, so inflation has gone up recently. We all know that we’re facing it, but let’s talk about incomes because I think the personal income rate on average for Americans has not kept pace with that inflation number. Would that be a correct statement? And is that, how does that correlate to what we’re talking about? David Anderson, PhD., Texas A&M University Yeah, I think there is some evidence of that. And typically we talk about inflation, rising price levels across everything, right? And wages are one of those things, but often what we see is sometimes that other costs are going up, but wages aren’t. A lot of times wages can be very sticky. And so it becomes that time difference for wages to catch up with everything else, that that’s what puts people in a bind. You know, in some industries, particularly in agriculture, we’ll talk about a cost price squeeze where costs go up, but the prices of what we’re producing and selling have not. And eventually sooner or later they do, but it’s that time for markets to change, to react, that really puts people in a bind because, you know, at times wages don’t keep up with the other costs in the economy. Jeffrey Snyder, Broadcast Retirement Network How much of this, when you bring in the AI, you know, AI is, we’ve talked with you about that, it’s pervasive everywhere, probably used in some of the research that is done in the agricultural and beef cattle industries. I’m sure they’re using the tools, but how much does that have a depression, depress some of the things we’re talking about? Does that help depress the wages and therefore creates this challenging time, helps create this challenging time? Meaning it’s not just one, it can’t just be one factor, right? You can’t just point to one thing and say, it’s always that thing. There’s a multitude of things. Does AI have a component here? I’m sorry, go ahead. David Anderson, PhD., Texas A&M University You know, I think that’s a really great question that I’m not sure I have a good answer for, because I’m not sure we’ve all figured out where all the places AI is going to, what all those impacts in the workplace are going to be. You know, we may find we may find some real gains in some areas that actually don’t affect jobs or employment or wages. We may see a big productivity boost. And so that doesn’t mean fewer people working, that means everybody that is working is more productive and we can see growth, economic growth from that. But I’m not sure, I’m not sure we have a really good, complete view of how all the things, how all the ways AI is going to change really our world. Jeffrey Snyder, Broadcast Retirement Network Yeah, I think we’re, I tend to agree with you. Anecdotally, I think we’re just kind of scratching the surface about how it’s going to be deployed and how it’s going to move around human resources and what human resources will be doing. Let’s transition a little bit, if I may ask you about beef prices, because from what I’ve read, and I want to get, you’re the expert, not me, beef prices at grocery stores have gone up. And I don’t know if that’s certain cuts of beef or not. So you tell us what, from your, through your lens. David Anderson, PhD., Texas A&M University Yeah, you know, beef prices, if we look at the data that shows up in the consumer price index, if we look at beef prices, they’re still above a year ago. They’ve actually come down over the last month or two. And, you know, if we looked at beef prices at retail, which is really a grocery store price in that data, it typically peaks in mid-year and then begins to go down. And so we are seeing a bit of a more normal kind of seasonal pattern to prices where prices are coming down. Prices tend to come down because we tend to produce more beef in the second half of the year, in the kind of the late summer, fall than we do in the springtime. So we get a little more beef. And also we change kind of the beef items that we buy in, you know, seasonally. And so I think we have some of both going on right now and it’s led to some declines from kind of mid-year. Jeffrey Snyder, Broadcast Retirement Network And I think one of the last times we talked to you, you talked about importing some beef to help bring the price down. That wasn’t going to be the immediate fix. Is that what is it? Is it the production? Is it the importing? Or is it consumer taste or a combination of all three that have really led to this short-term decline? David Anderson, PhD., Texas A&M University You know, I think some of all of that, I think we have more evidence, really more on the supply side, changes in kind of packing margins. If we looked at what meat packers have earned, they’ve lost a lot of money. And as a response, they’ve closed plants. They’ve reduced the number of shifts that they run during the week, run on fewer days during the week. And I think that that has had an effect on what they’re paying for cattle. It’s reduced prices. And so I think there’s a bunch in there. I think we have less evidence on the demand side in terms of, are people buying less beef? Are they shifting to different meat items? I think we have a lot less evidence there than we do on the others. The imports, you know, we’re importing a record amount of beef this year. The old record amount of beef imports was last year. We’re importing a lot because our prices are high and our supplies are down. And so the market signal is to import more. And that does, you know, directionally, that does mean lower prices. And so, but we’ve had overall just very good demand. Consumers like the product and consumers continue to buy. Jeffrey Snyder, Broadcast Retirement Network Yeah. Well, it’s college football season. We’re going into the holidays. People want their steaks. They want their burgers. And I guess, and all of the above. Let me transition back because we talked earlier about the kind of the economic impact of these, of inflation and stickier wages. An area I think that often gets overlooked is food insecurity. And I want to get your sense, you know, a lot of us are fortunate that we don’t have to go to a food bank, but many Americans do go to a food bank, especially during this time of year. Food banks around the country though, are struggling to keep up with the demand as well. David Anderson, PhD., Texas A&M University You know, I think, you know, get back to what we talked about earlier with if housing and food takes more than 50% of our income, there’s not much left for anything else. And we know we have people in our own communities that are struggling. They may work very hard. They just may have a job that doesn’t pay a lot of money. And you throw in, you know, fuel costs and everything else. And, you know, everything we see is increasing demands on our, on food banks, food pantries and the like. And so, and it makes it more difficult because when they get cash donations there and they go and buy food, those dollars don’t go as far as well. And so we know this is a time of year that I think sometimes those needs are felt most keenly with the holidays coming. And, you know, I think it really comes down to an opportunity for those of us who have been blessed not to necessarily have those problems. Maybe we can do, figure out how we can help out. And we’re really helping our neighbors when we do that. And, you know, this is the time when it’s probably more front of mind. Jeffrey Snyder, Broadcast Retirement Network Yeah, I would imagine it would be interesting to get somebody on from one of the local food banks there in Texas or here in North Carolina to answer the question, but I would imagine like staples, like canned foods that, you know, we’re not talking about filet mignon. We’re talking about the basics, things that are calorie dense, but also have some level of nutrition, right? I mean, that you find in like soups and canned vegetables and canned fruits and things like that, frozen foods. David Anderson, PhD., Texas A&M University And, you know, I think the thing to remember too, is so many of our food banks don’t have the infrastructure for perishable items. And so we do the stuff that’s non-perishable, you know, you know, rice, peanut butter, these staple items that are nutrient dense, that deliver not a lot of nutrition. Some food banks have the ability to do things like milk and meat at times and produce. But, you know, a lot of the basic staples that folks need. And I think those, those demands are only getting larger, it would seem. Jeffrey Snyder, Broadcast Retirement Network Well, you know, I believe the consumer price index comes out every month. I think you and other economists probably wait with bated breath. I think a lot of Americans do. They want to see that number go down. Hopefully things start to turn down at the end of the year and into 2027. I guess it’s a TBD. Dr. David Anderson, always great to see you. Thanks for popping by the program and sharing your insight. And we look forward to having you back on the program again very soon. David Anderson, PhD., Texas A&M University Thanks. It’s great to be with you.
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