Here in Washington, the cherry blossoms are out in full glory. It's something that happens ever so briefly, at the beginning of springtime. The burst of color comes after a winter in which some folks were wondering if they'd ever see anything but gray again.
After an employment report on Friday that seemed to reflect spring temperatures (not too hot, not too cold), we'll be looking for any kind of sizzle amid a kind of B-league series of economic reports due this week.
Updates on credit, prices and more
Here's what's on tap this week:
- The Federal Reserve reports on February consumer credit, Monday at 3 p.m. (all times Eastern).
- The Federal Reserve releases minutes from the March policy-setting meeting, Wednesday at 2 p.m.
- The Labor Department releases new weekly claims for unemployment benefits, Thursday at 8:30 a.m.
- The Labor Department reports on the March Producer Price Index, Friday at 8:30 a.m.
Chewing on the rising cost of food
Have you checked your grocery bill lately? We follow food from farm to table to learn why it's costing more.
LISTEN TO AUDIO
Mark Hamrick: From Bankrate.com, this is "Your Money This Week."
We connect the dots between what's happening in the world and your wallet.
I'm Mark Hamrick reporting from Washington.
Rising food prices. They've been the one-sided part of the inflation story recently. Some of the price rise is because of the California drought. Some of it is because of rising global economies where consumers, in places like India and China, also want to eat better.
We're going to examine food, from farm to table, with our guests this week.
The grocery store business itself is going through dramatic changes. Phil Lempert of SupermarketGuru.com says it's a golden age. We'll have the first of a two-part interview.
We'll also venture to the nation's midsection, for a chat with farm economist Art Barnaby with Kansas State University. Head to the vegetable section, and you might just run away screaming.
Why are food prices rising, and what's the outlook?
And we take a look back at this week in business history, with an important milestone for Apple Computer.
All of that and more coming up on "Your Money This Week."
If you're like me, you spend a lot of time browsing grocery store shelves. For me, it is a bit of escapism. I like to cook, and I like to eat -- a little too much.
Phil Lempert looks at the business from a couple of different perspectives. Not only does he give us some terrific advice on how to shop, he tells us about big changes in the industry, which is increasingly competitive.
To begin, I asked Phil whether this is a dynamic time in the business of selling groceries.
Phil Lempert: It is not only the most dynamic time, it is the most challenging time and it is the most exciting time.
If we take a look at Safeway being sold, for example, this is going to have a huge impact on just about every community in the country. What we saw when they pulled Dominick's out of Chicago is those stores being bought up by a lot of other players, not just one. I think we are going to see the same thing with Safeway.
We are going to see the rise of the regional chain back. We are going to see the rise of the independent stores, and I think, bottom-line for every shopper, probably five years from now, it's going to be a whole different shopping experience than it is today.
Mark Hamrick: And so does that acknowledge somewhat that, let's say, global enterprises are not always good at delivering products at a local level?
Phil Lempert: Absolutely. The key is understanding the consumer. What does the consumer in Arkansas want, versus the consumer in New York City? Very different mores, very different attitudes, very different taste buds.
So I think what we are really going to start to see is much more personalization when it comes to food. And also, let's not forget Amazon. Let's not forget Fresh Direct. We are going to see the rise of more delivery services than ever before, and now with Google having same-day delivery, just about every supermarket is going to be able to fulfill that promise.
Mark Hamrick: And, at the same time, I am wondering -- we are talking about the inability of global enterprises to deliver products well, and I do not mean deliver in the sense of putting it on your doorstep, but to understand how the consumer thinks and wants to make decisions. If you still have rather large companies that are attempting to do business in local markets, and in some cases differently from market to market, how are they becoming better able to do that over time?
Phil Lempert: Well, with computerization, with the Internet, with our mobile devices being probably the most important thing that we own these days, it is going to be much easier to program supermarkets to meet consumer needs.
There is no question that technology is going to allow for all that. However, it is really the shopping experience that is going to make the difference. It is not just having the right product on the shelf at that time, but when you walk in a store, having the feeling that this store is for me.
Trader Joe's is a perfect example of that. When I go to Trader Joe's, I want to wear a shirt, I want to ring the bell, I never want to leave. And a lot of it has to do with the infectiousness of their employees. Their employees want to be there, versus what we find in the traditional supermarket or conventional supermarket at the same time.
And you mentioned some other channels of distribution. We are also seeing the rise of CVS and Walgreens in the food world. The new stores that they are building are about half food products.
We are also now starting to see smaller stores. Lunds and Byerly's Kitchen, who just opened up, oh, probably just about a month or so ago -- it is a whole new format. Seventeen-thousand-square-foot: part restaurant, part gourmet store, part traditional supermarket.
So it is a very exciting time, and, as I said before, challenging for some of those huge retailers who cannot move on a dime.
Mark Hamrick: And Phil, to wrap this part of the interview up, how do you see it changing going forward, in the future? Do you think this rate of change will continue to accelerate?
Phil Lempert: I think over the next two, three years, we will see a lot of change. We are going to see many more mergers, many more acquisitions, and then it will slow down. At the same time, we are seeing more upstarts. We are seeing more competitors going after Whole Foods, whether it is Sprouts or the Fresh Market. So we are going to see a lot of change over the next few years before it really slows down.
Mark Hamrick: Phil Lempert, editor of SupermarketGuru.com. He spoke with us from his office in Santa Monica, Calif.
Join us again next time for more of our conversation with Phil about money-saving tips for shoppers: everything from where to shop, to new apps to help at the checkout counter.
We now take you out to the farm. Farming is big business in the U.S., and it is important, since it provides us with the food we bring to the table. Whether we're talking about family farms or big corporate enterprises, changes in food prices matter. And they often trickle down to affect all of us.
Our guest is Art Barnaby. He's an agricultural economist at Kansas State University, in wheat-growing country.
As we began, I asked him what's been behind the rise in food prices seen so far this year and how much is connected to the California drought.
Art Barnaby: As I see it, yes, you have some drought-driven prices on fruits and vegetables. We also have to remember that some of those are growing in other regions of the country. I would anticipate down the road that rain will return to California, normal rain, and that the supply of those items will return. If for some reason I thought this was a permanent situation in California, you would see an expansion of fruits and vegetables in other states that can grow many of those crops -- such as south Texas and south Florida.
Mark Hamrick: So if you were to advise, let's say, a family member about what they might expect in the future with some of these prices -- and, mindful of the fact that food prices have shown up in the consumer price index as something that's been pressuring what little inflation we have seen in the U.S. economy lately -- what would you say, generally, the outlook for food prices is?
Art Barnaby: Well, again, on the fruits and vegetables, I still think this is a fairly short run, that that will work itself out. And by short run: within the next year.
Meat supplies, it depends on what type of meat we are talking about. You can expand poultry pretty quick, but when it comes to expanding beef, it's a little more difficult, although even that would happen with some low-cost corn.
You don't have more steers going to the slaughter plant, but what you do have is people will leave them in the feed lot a little longer, let them get a little bigger before they are shipped for processing. But that only makes sense if you have cheap corn, and right now we don't, but that could change by fall. All it would take is a really big crop, and we will be talking about low corn prices. You may see a little bit of a decline in prices: what you are paying for beef at the counter, and perhaps other meats.
Mark Hamrick: And then finally, we talk about -- we started talking about production of food on a global basis, but the other part is obviously food is consumed on a global basis, and people all around the world live in economies that are different from ours. Two of those that are the most significant, India and China, essentially have economies where the standard of living is slowly on the rise. As we go to the grocery store and buy -- whether it's protein, meat, or fruits and vegetables -- are we finding essentially increased competition with those other economies that are to some degree causing our prices to be a little more expensive at the end of the day?
Art Barnaby: Absolutely. Every economy, where you start to increase their GPD, they in fact do gravitate to higher protein diets. That is what is going on, and you have a lot of people, obviously, that live in China. So yes, they are impacting the grain markets, and one of the reasons that I really wonder if we are going to have corn back in the days of $3 prices that everybody was worried about just six months ago.
Mark Hamrick: In other words, that global competition may put a floor under some of these prices and ultimately cause price inflation.
Art Barnaby: Exactly. I think we might find demand there that we did not know there. The simple answer is: the cure for high prices is, in fact, high prices, and the cure for cheap prices is, in fact, cheap prices. These markets are dynamic, and buyers and sellers adjust. I think quicker than maybe they did when I first started in this job, because of global communications.
The Board of Trade is really front and center, worldwide, when it comes to figuring out what the prices of these commodities really are. With that in mind, the price information gets transmitted around the world very quickly.
I should correct that. That is the CME now; they bought out the Chicago Board of Trade. You can tell I am an old-timer.
Mark Hamrick: Professor, this is a terrific conversation. Thanks so much for your time.
Art Barnaby: You bet.
Mark Hamrick: Professor Art Barnaby with Kansas State University. He spoke with us from his office in Manhattan, Kan.
On the subject of saving money, did your that our website, Bankrate.com, has more than 20 calculators, just to help you save money? Check out the "Calculators" tab at the top of the screen. From there, you can find the "Savings" section.
It's a curse of modern technology: Being put on hold.
And Bankrate's Doug Whiteman reports, it seems like that's been a particular ill for people calling into certain insurance companies lately.
Do you need to call your health insurance company? Better be ready to hold, because it could be a while.
I'm Doug Whiteman with your Bankrate.com Personal Finance Minute.
"All of our representatives are assisting other callers. Your call will be answered in the order in which it was received."
Consumer advocates and insurance agents say that as the Affordable Care Act brings health insurers more customers, the industry's customer service resources are being strained. Consumers tell of sitting on hold for hours at a time before reaching a live representative.
"We appreciate your continued patience. Your call is extremely important to us."
If your insurer has a "wait problem," try calling first thing in the morning, or on a Saturday, if the call center is open at that time. You might get through more quickly if you repeatedly hit the zero or star key on your phone. And see if your question might be answered on the company's website.
For more on how to cope with holding for your health insurer, visit Bankrate.com. I'm Doug Whiteman.
"Please remain on the line for the next available representative."
Finally, our look at this week in business history:
Today, we're typing in April 11, 1976.
It was a kind of birthdate at the then-upstart Apple Computer company
That's because on the date 38 years ago, Apple's first personal computer was released, designed and built by company co-founder Steve Wozniak.
To finance the effort, partner Steve Jobs sold his Volkswagen Microbus and Wozniak sold his scientific calculator.
All of these years later, iPhones, iPads, iPods and Mac computers, many consumers are extremely grateful for their efforts.
You've been listening to "Your Money This Week."
If you enjoyed the podcast please check us out on iTunes and rate and subscribe to the program.
For more on this and other personal finance issues, visit Bankrate.com. And you can follow us on Twitter @bankrate.
Thanks to producer Lucas Wysocki for his work in the studio and to colleague Doug Whiteman.
I'm Mark Hamrick. From all of us here at Bankrate, here's hoping you have a great week.
Gauging the Federal Reserve's plans
Release of the Fed's meeting minutes will give additional insight into the most recent policy-setting session, in March. The document provides a bit of color on the behind-the-scenes discussion about monetary policy, including what led to the decisions to continue reducing asset purchases and hold interest rates at record-low levels. It was also the first time that Chair Janet Yellen presided over a meeting.
With the unemployment rate stuck at 6.7 percent amid steady but only moderate jobs creation, what is the Fed looking at?
"I believe the Fed will be focusing on any signs of upward wage pressure in future jobs reports as an indicator for potential timing on future policy tightening, i.e., raising overnight rates," says Alan MacEachin, corporate economist with Navy Federal Credit Union.
Wage pressure has been virtually nonexistent recently. So, there's no green light flashing for Yellen and her fellow central bankers to lift interest rates just yet.
Inflation, what inflation?
With wage gains restrained, broad increases in prices have largely been absent in not only the U.S. but also the global economy. Economists expect the Producer Price Index, the main gauge of inflation at the wholesale level, will show little change in March, despite increasing food costs.
Downward price pressure is getting some help from falling energy costs, according to economists at IHS Global Insight.
Slack in the economy and tame core inflation (excluding food and energy) "should keep the Fed from tightening policy at least until the latter half of 2015," says MacEachin.
This week in business history
April 11, 1976: a sort of birthdate at the then-upstart Apple computer company.
Apple's first personal computer was released, designed and built by company co-founder Steve Wozniak. Legend has it that to finance the effort, partner Steve Jobs sold his Volkswagen Microbus and Wozniak sold his scientific calculator.
Let me know what you expect with the economy or your personal finances and follow me on Twitter: @Hamrickisms.
And for a look between the lines of the Fed's most recent policy announcement, check out "What did the Federal Reserve say?"