Demand is one-half of the price equation. It is dependent upon both the consumer’s willingness and ability to buy a product. And that willingness is based on preferences. Those preferences to purchase must be supported by financial means – income. Fundamentally, the health of the economy is key to the consumer’s financial situation, i.e. wages and prices.
As I have shown more than once in recent articles, the willingness to buy beef appears to be solid. However, it is the other part of the equation that creates uncertainty in the market outlook: the consumer’s financial situation. That financial well-being is dependent on the state of the economy. So, just as analysts use daily reported prices to assess markets, we also rely on the government’s reporting of the state of the economy. To be honest, the reports with those significant data revisions are not helpful when trying to assess the outlook for consumer demand in the face of record high beef prices.
On Aug. 21, the Bureau of Labor Statistics released their monthly jobs report and showed a downward revision of 818,000 in the total number of jobs reported for March of this year. That is the largest revision since 2009. While the figure does not say that 818,000 jobs were lost that month, it does show that there were significantly fewer people working. And, that number will not be final until February 2025.
On Aug. 29, the Commerce Department released their first revision of second quarter economic growth. The gross domestic product (GDP) for that quarter was revised upward from an annual rate of 2.8% to 3.0%. This upward revision was not expected by most economists. According to one commentary, is an economy growing 40% faster than thought by most economists.
So much for taking into consideration statistics concerning the general health of the economy when analyzing demand! These revisions make the Cattle Inventory revisions appear insignificant. While we do spend more time on the supply side of the equation when analyzing the market outlook, the demand side is just as important – particularly today. Those government reports concerning the health of the general economy provide much of the basis for that analysis. The analysis requires consistency and with these revisions against expectations is not helpful.
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