Jonathan Newman, via the Mises Institute
Economist Jeremy Horpedahl
The silly claim has been dismissed
Anticapitalists claim that food scarcity is a necessity for capitalism to make profits
He showed a graph of Bureau of Labor Statistics data showing a significant decrease in household food expenses as a percent of income. This was from 44 percent in 1901 to just 9 percent in 2021. It is a cause for celebration and can certainly be attributed the abundance of markets economies.
When Jordan Peterson asked:
What's been happening in the last two?
' I went digging.
First, I confirmed Horpedahl’s observation. The amount of money we spend on food has dropped dramatically as a percentage of our budget. Second, I confirmed what Peterson said: there was a spike in food expenditure when the covid scandal and all of its associated government interventions struck (figure 1).
Figure 1: Food expenditures and personal consumption, 1959-2023
The spike is a bit like a blip.
A person who is unaware of recent events might look at this chart and think, "Yeah something strange happened in the year 2020, but everything looks back to normal." This chart is not representative of anyone's experiences. No one today would claim that grocery shopping and restaurant visits cost the same in 2019 as they did then.
What has changed since 2020? Why does this graph feel off?
It is important to assume that the Bureau of Economic Analysis' data is not totally wrong.
Be skeptical about government data
Why would a January 20,23
On consumer inflation sentiment, do you conclude that there is a disconnect in the data provided by the government compared to what consumers are paying for essentials?
Consumers' experiences are qualitatively different. The trend in spending may be back, but it's not the whole picture. The'skimpflation and shrinkflation' has taken a toll on our food consumption.
Many consumers believe that higher prices are unpopular.
You can also find out more about the following:
Price inflation is a result of this. Businesses may reduce the amount of food that is in the package or dilute the product while keeping the same quantity.
Websites such as
Document some of these cases
Sara Lee blueberry bagel reduced from 1 lb., 4.0oz. Per bag, Sara Lee blueberry bagels are reduced from 1 lb.
Bounty "double rolls" reduced from 98 to 90 sheets (how can it still be called a "double roll?")
Without any obvious difference between the sizes of the containers
To 18.0 fl. oz.
Green Giant frozen cheese and broccoli sauce packages are reduced to 8.0 oz. Green Giant frozen broccoli and cheese sauce packages reduced from 10.0 oz. No change to the number of servings advertised per package
Skimpflation can occur when the weight or volume of a product is the same but the proportions are different. Hungry-Man Double Chicken Bowls, a frozen meal of fried chicken with macaroni & cheese, maintained a weight of 15 oz. but the amount of protein dropped from 39 g to 33 g.
While firms reduce the amount and quality of food they sell
Consumers are choosing to buy less food, and sometimes even food of lower quality.
The January 2023
Consumer inflation sentiment survey shows that 69.4 % of respondents have reduced quantity or quality in their grocery purchases because of price increases.
Restaurants have also experienced a long-lasting and widespread change in the customer service. For months or even years, many restaurants only offered take-out. Although the option to dine in has been reinstated by some restaurants, service is not the same. QR-coded menus, shorter opening hours, less staff and terse attitudes are all part of the new service.
It is not surprising that massive government interventions including the creation of trillions of dollars would have countless impacts--
Some of these statistics are available, but there are many others that do not
Figure 2 shows some surprisingly dull data about food expenditures during the German hyperinflation period.
Figure 2: Household spending in Germany, 1920-22
Source: Carl-Ludwig Holtfrerich
The German Inflation 1914-1923: Causes & Effects from an International Perspective
, trans. Theo Balderston (New York: Walter de Gruyter, 1986), cited in Gerald D. Feldman,
The Great Disorder: Political Economy and Society in the German Inflation, 1914-1924
(New York, Oxford University Press, 1997), p.
The proportion of expenditures didn't change much, even though prices reached absurd heights. Over the same time period, the food price index increased by 14,613 percent. The prices of all goods, including food, increased dramatically, and the proportions of expenditure across categories remained stable.
Gerald D. Feldman
On the German household spending data, in a familiar way:
The full impact of the changes was best understood qualitatively, as many studies have shown.
Other qualitative changes included a "reduced quantity and quality of food consumed" and "poorer clothing."
These subtleties are not captured by government statistics.
It should be clear that your personal experience as a customer is more than the price you paid for a particular weight of food. We're not machines. We don't measure our lives by miles per gallon, or kilowatt-hours.
Ludwig von Mises was a great economist
The conceited aggregates, indexes and figures that purport to measure different aspects of consumer lives are out of place: "The pretentious solemnity displayed by statisticians and statistical offices in computing the indexes of buying power and cost-of-living is out of order." These index numbers at best are crude and inaccurate representations of the changes that have taken place.
The average housewife is not able to tell you much about the price changes that affect her household.