Eating Out

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While sale of dairy products have been good, the food service sales of dairy have been off.

Actually, sales at eating places have been flat since the "Great Recession" began, according to the Bureau of Economic Analysis (BEA). Logically, one might think price at the eateries might have dropped off. According to the Bureau of Labor Statistics (BLS) prices continued to rise.

Perhaps everyone is waiting for the other shoe to drop (double dip recession).

Something is Wrong

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The August 2, 2010 post covered the recession and "all milk" price. I am posting the graph again for comparison.

U.S. Department of Commerce's Bureau of Economic Analysis (BEA) publishes monthly, Personal Consumption Expenditures (PCE. The PCE tables indicate how much the public spent for a number of items. There are two lines for dairy which I have added together.

As can be seen, consumer spending for dairy hardly dropped during the "official" recession (calculated by NBER). The drop from begining to end was just about 2% and the fall in the Consumer Price Index (CPI) was about 5%. All of which means, the public actually increased purchases of dairy products during the recession.

So, there is something very wrong with conventional story about the fall in farm milk price.

Recession & All Milk Price

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We have had two recessions in the past ten years as indicated officially, by the National Bureau of Economic Research (NBER).

The first was the dot.com bubble. This seemed to have no effect on farm milk price. The most recent recession time period, seems to be very much a factor in farm milk price.

In spite of all the talk about supply/demand, this most recent recession was about finance. Credit tightened and the buyers of milk were able to "extract" their needs from dairy farmers.

Officially, according to NBER we are out of the recession. However, there are many who talk about a double dip recession. That is, a second following on the heels of the first.

The possibility of a double dip is a genuine cause for concern.

Although, officially we are out of the recession, to most people we may as well still be in recession. We are likely to have a "jobless" recovery. That will keep them down on the farm.