Elam Study on Food Prices

A major U.S. long term economic trend has been increasingly affordable food. Affordability has been commonly measured as the percent of income spend for food. The trend is not a straight line; affordability improvement has been slowing over time, but was still trending down until 2006…Since 2006 this trend has reversed, and that reversal is the largest since 1950. Increasing food affordability has freed up income for spending on all other consumer goods and services, helping the economy grow and add jobs.

Since 2006, food prices are increasing compared to all other prices, and consumers’ food costs are now increasing relative to disposable income. The gap between the 1950-2005 long term affordability trend and actual food costs is increasing. The last time the gap grew in a manner similar to the current experience was during the mid 1970s when farm commodity prices boomed as a result of growing grain and soybean exports. The current gap is much larger than that one.

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