This year's holiday season will be a mixed blessing on the economic front

Americans can expect to pay less for their Thanksgiving turkey this year, but what they save on the bird will be largely spent on fixings. The average price for an 8–16 pound turkey will cost $1.27 per pound, which would be 22% lower than last year. A drop in avian influenza cases that devastated the turkey crop in 2022 has allowed the turkey population to recover in the U.S., driving costs lower.

At the same time, the increased number of trucks available in the transportation industry has also eased supply constraints, which has reduced costs throughout the food industry. If you have decided to serve ham instead, the bad news is that prices have risen 5.2% since last year. At $4.56 per pound, ham prices are at an all-time high. The culprit is higher feed prices and fewer hogs.

Over the last year, the burden of higher costs hit agricultural producers and food manufacturers, especially in the processed food areas. Corporate profits have fallen as raw materials, energy, transportation, and packaging costs have continued to rise. Take the example of canned versus fresh cranberries, a stable for many Turkey Day tables. Fresh cranberry prices are down 20%, while canned cranberries are up 60% from last year. Canned pumpkin (30% higher) and canned green beans have also seen price spikes, but the fresh varieties have not.

Food prices in general are still increasing having risen 17% over the last two years, according to the Bureau of Labor Statistics. As such, you should expect to pay more for Thanksgiving side dishes. Pies, milk, rolls, stuffing, pumpkin pie mix, whipping cream, sweet potatoes, and more will cost you about 4% more than in 2022.

However, the higher costs of the dinner will certainly not stop the tradition of "home for the holidays" throughout the U.S. The 2023 holiday travel season is expected to be the busiest ever, according to the Transportation Safety Administration. Next Tuesday and Wednesday and the Sunday after Thanksgiving will be the most crowded days on the nation's highways and in airports.

Airlines expect record traffic, with 3 million seats on 22,000 flights per day. As for driving, Wednesday is the worst time to hit the road with traffic 80% higher in many areas. The best times to travel during the peak Thanksgiving period are on Wednesday morning and Sunday morning, according to AAA.

As for Black Friday and the kick-off of the 2023 holiday spending season, early indications are that we should expect to see a 3-4% rise in holiday spending. That would be in line with the average annual retail gains we have seen in the 2010 to 2019 period, although down from last year's 5.4% gains.

Railroad operators (today's version of Santa's sleigh) are reporting fewer loads from ports to haul inland. The same could be said for the big delivery companies, FedEx, and United Parcel Services, that are not expecting stellar revenues toward the end of this year. 

Retailers, especially some chain stores, are still struggling to get rid of excess inventories from last year in their stock rooms and warehouses. Less holiday hiring also indicates most retailers are not expecting a booming season. In addition, the consumer is already struggling with higher debt loads and higher expenses thanks to inflation and interest rates.

Pay special attention to Black Friday deep discounts this year. Otherwise, it might be a good idea to keep your hands in your pockets and hold tight to your credit cards for a few more weeks. I expect there will be even deeper discounts the closer we get to Christmas.

Bill Schmick is a founding partner of Onota Partners, Inc., in the Berkshires.  Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of Onota Partners, Inc. (OPI).  None of his commentary is or should be considered investment advice.  Direct your inquiries to Bill at 1-413-347-2401 or e-mail him at bill@schmicksretiredinvestor.com .Investments in securities are not insured, protected or guaranteed and may result in loss of income and/or principal.