Everyone loves a universal holiday like Thanksgiving. In the United States, it is November 23 this year. Canada was a month earlier, on October 14. While many other countries do not honor turkeys and pilgrims, many have their version, where you kick back and say “thanks.”
But in the United States this year, the cost of celebration actually dropped on a unit cost basis, unlike the surging rates of increased revolving credit card debt.
First the good news. According to the American Farm Bureau Federation’s 38th annual dinner survey, the average cost for feeding ten people a Thanksgiving dinner dropped by 4.5% in 2023, from $64.05 to $61.17. That makes this year’s a mere $64.05, less than half the price of a McDonald’s Big Mac. The 2022 pricing of a Thanksgiving dinner spiked over 2021, primarily caused by the funky supply chain issues that came from COVID-19. These were pipeline issues that smoothed out this year.
A Metric to Consider in Your Credit Policy 2024 Forecast: Regional Swings
The most interesting issue this year is the difference between regional costs. According to the American Farm Bureau Federation, “the least expensive food region for Thanksgiving dinner is the Midwest at $58.66, followed by the South at $59.10, the West at $63.89, and the Northeast as the most expensive at $64.38.”
The Farm Bureau calls out the importance of the SNAP program in the United States, an interesting topic we discussed in a recent Javelin Impact Note. “On the nutrition assistance side, many families are able to put dinner on the table thanks to farm bill programs like the Supplemental Nutrition Assistance Program (SNAP). In 2022, an average of 41.2 million Americans received SNAP benefits at any given time, a full 12.6% of the U.S. population.”
Turkey Meals Down, Credit Card Debt Up
All revolving debt, which is mostly credit card, rose from $1.17 trillion in Q3 2022 to $1.29 trillion in Q3 2022, or up 10%, as turkey dinners dropped. The only conclusion that can be made is that the household budget is under stress, which we pointed out more than a year ago. Sure, inflation is up, and so are interest rates, but the household budget is tighter than ever. All in all, it translates into credit card risk.
So, enjoy the turkey, but watch out for chargeoffs in 2024. It will prove to be a very tough year for credit risk management.
