Economic Recap: Food Prices Surge, State Tax Receipts Fall
Among other economic news of relevance to foodservice and the foodservice equipment industry:
- Food prices rose again in April at both the wholesale and retail levels. Wholesale food prices at the final demand level surged 2.7% in April, according to the Bureau of Labor Statistics. Prices also rose strongly at the intermediate stages of demand. Wholesale food prices have risen every month this year, with the rate of increase accelerating. Price increases for beef and pork are the main culprits. The BLS also reported that menu prices rose 0.3% in April, while retail food prices rose 0.4%.
- Just as they predicted, income-tax collections at the state level appear to be heading into negative territory in the first quarter of this year, according to analysts at the Rockefeller Institute of Government in Albany, N.Y. The Institute has been warning for more than a year that the income-tax “bubble” created by taxpayer frontloading in anticipation of the so-called “fiscal cliff” in early 2013 would burst in the first half of 2014. Based on preliminary data from 46 states, personal income-tax revenues fell 0.4% in the first quarter, compared with the year earlier period. Sales-tax revenue growth was also very weak in the quarter, thanks to the harsh winter, rising only 1% for 41 early reporting states. Overall revenues were up only 0.7% for the quarter.
- Results for the two major indexes tracking consumer confidence were mixed in May. The Consumer Sentiment Index from Thomson Reuters/University of Michigan fell back to 81.9 in May from 84.1 in April, while The Conference Board’s Consumer Confidence Index rose to 83 in May, up from 81.7 in April. UM Surveys of Consumers Chief Economist Richard Curtin said low expectations for wage growth was a factor in the Sentiment Index decline, but added, “The small May loss should not detract from the fact that consumer confidence during the first five months of 2014 was higher than anytime since 2007.”