Peanut prices respond to demand and supply

How is Peanut Butter an Economic Indicator?

by Elaine Schwartz    •    Jun 5, 2012    •    2094 Views

The head of the Cleveland Fed cares about peanut butter sales.

According to the WSJ, Sandra Pianalto, president of the Federal Reserve Bank of Cleveland, “likes to grill” the vice chairman of her board, jam CEO Richard Smucker, about peanut butter sales. Up 9% during 2011, rising peanut butter sales reflect increased demand for a relatively inexpensive source of protein when the economy is sluggish.

This takes us to Mr. Peanut and peanut butter. With an adult market their target, Kraft has begun to produce peanut butter. Instead of pb&j, they are suggesting peanut butter soup, smoothies and yogurt, and English muffin peanut butter snacks. In a $1.8 billion market dominated by Jif (J.M. Smucker), Skippy (Unilever) and Peter Pan (ConAgra), Mr. Peanut’s entry and disappointing GDP numbers, might shift supply even further to the right.

Leading indicators like the stock market telling us where we will go while lagging indicators such as unemployment reflect the past. Maybe we can call peanut butter a coincidental indicator because it tells us where we are?

My interest in peanut butter began wth this WSJ article. But here and here, we have looked at unusual economic indicators before. For more about Planters’ Mr. Peanut, a history is here from Kraft and you can read more about their decision to produce peanut butter here at Bloomberg.

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