Editor's note: This is an excerpt from a research report released by Hedgeye Macro on 6/19.
We continue to field arguments against the inflationary read-through on the commodity squeeze. Sharp increases in livestock and poultry prices over the last ten years in the face of stagnant wage growth, a decline in savings rates, and a declining U.S. dollar illustrate this reality in staggering fashion.
If Janet Yellen’s commentary earlier this week is any indication, the Fed will continue to promote yield-chasing from financial intermediaries and those lucky enough to hold equities and fixed assets. The PCE survey from the BLS reports the top quintile of income earners takes 66% of the aggregate income in the basket from interest, dividends, and investment related income. Needless to say, a majority of Americans consume meat.
2013 Meat Consumption Per Capita (KG/Person):
- United States: 106.9
- China: 53.5
- World Average: 34.9
The average consumer we have continuously highlighted is reaching insolvency. Median net income margins have consistently compressed over the last five years to about 1.38% with savings rates decreasing over the same period.
Last Ten Years:
- USD Index: -9.8%
- Trailing 1-year U.S. Personal Savings Rate: -9%
- S&P GSCI Livestock Index: +69%
- U.S. Private Sector Avg. Hourly Earnings (Real): -43%
