There are definite signs the economic and political winds are shifting around, which sometimes occurs when reality starts becoming obvious even to the “uninformed.”
There are broad trends in important headline categories but movement within categories are key.
California’s consumers are feeling the bite with the combination of inflation plus their state government picking on fast food operators for “special” treatment. The presidential sweepstakes are nearing a critical stage unusually early due to exceptional circumstances. Beef demand is shifting within strong trends. Broad economic trends regarding the job market, inflation, the Fed and GDP have moving parts, too.
But in general, the affordability challenge for many consumers is harsh. It’s worse, of course, in California, and Gov. Gavin Newsom (D) and the Assembly’s new law mandating a $20/hour wage for fast food workers has been catching a lot of flak. Some 10,000 workers have lost their jobs, as outlets lay off workers plus cut hours, raise menu prices and close stores to cope. A business association officer noted that not only is the law hurting the fast food industry—by design?—competing small businesses are being damaged by employees wanting their wages bumped up or leaving.
With half of beef production (historically) moving through foodservice, political attacks on fast food, lower traffic in restaurants and pricing challenges provide some headwinds we don’t need.
The official also pointed out that while the law’s proponents leave the perception they are targeting big corporate chains like McDonalds or Burger King or Wendy’s that they claim can “afford” increased labor costs. But many fast food outlets are owned and operated by small business franchisees with narrow margins—too narrow for such a big increase in costs.
Those same franchisees have been targeted by the labor unions and the National Labor Relations Board (NLRB), attempting to destroy the franchise model by issuing rules tying franchisees and corporate parents together. There are thousands of franchisees, making it hard for labor unions to unionize fast food workers. The goal for the unions and NLRB is to tie the corporate parents and franchisees together as “joint-employers,” making the parent “responsible” for local hiring, making union organizing easier.
Congress passed a resolution reversing the NRLB ruling but Biden vetoed it. A district court vacated the rule and appellate level cases are next.
The usual semi-boring presidential election season is anything but this time around. Biden’s physical and mental fitness, Trump’s legal problems, the struggling economy and the extreme border problem are keeping things uncertain.
To add to the excitement, the Democrats may be forced to nominate their presidential candidate by Zoom before the party convention, where the formal process should happen. With their convention scheduled after Ohio’s deadline for nominations and the legislature’s refusal/failure to change the deadline, they have put themselves in a pickle. They certainly don’t want to concede Ohio’s 17 electoral votes, but with President Joe Biden’s struggles outside the White House, his polling data and the vice president’s lousy polling numbers, they’re in a fix.
Some of the under-the-surface jobs numbers are disconcerting. While the topline number showed 275,000 new jobs in May under the Labor Department’s “establishment” processes (frequently revised), the household survey of homes and small businesses (considered more accurate by many) shows problems.
It found full-time jobs down 605,000, part-time jobs up 286,000. It also showed 663,000 native-born Americans lost jobs and 414,000 “non-native” residents, including those with work permits and illegal aliens, gained jobs.
As for beef demand, while restaurant prices were up 4.1% in April, retail grocery prices increased at a 1.1% pace. CattleFax reported that while foodservice and retail prices had increased about the same percentage, the same amount of money went further when purchasing food for at-home consumption, reducing the cost/meal.
But demand as reflected in the boxed beef price has shown strength and the prices for 90% lean have approached highs not seen since the pandemic shortages.
We’ve also been moving more tonnage (higher carcass weights) at better prices. But there’s a shift underneath the trend, with CattleFax noting the All-Fresh Beef retail price was up 8.5% in April year over year and Choice retail beef was up nearly 4%, while ground beef topped 9%.
Politically speaking, if you would like to see changes made, here are some ideas. Help out some good congressional candidates. No president can accomplish much without the support of numbers and willing members in Congress. Contact your local election boards. Poll watchers and workers are needed to tighten election integrity everywhere. — Steve Dittmer, WLJ columnist
(Steve Dittmer is the author of the Agribusiness Freedom Foundation newsletter. Views in the column do not necessarily represent the views or opinions of WLJ or its editorial staff.)
