China Stimulus Package Boosts Commodities, Hurts Our Wallets

Commodities are sharply higher this morning after China announced a $586 billion spending package to stimulate its domestic economy.  While the declines in commodities over the last few months have helped to ease the pain on consumers' wallets, today's price gains across the commodity spectrum have taken back some of that windfall. 

As of Friday, the impact of year to date commodity price changes worked out to a net windfall of $2.61 per person per day.  This means that consumers were spending $2.61 less per day this year versus last year.  With today's rally in commodities, that windfall is now down to $2.24 per person per day.

click to enlarge

In the above chart we calculated the '08 price change of the major food and energy commodities in the CRB index (Corn, Soy, Wheat, Cattle, Hogs, Oil and Natural Gas) and multiplied the changes by the annual per capita consumption of each item.  While this method may oversimplify the actual costs, it provides a good idea of how changes in commodity prices have impacted consumers wallets this year.

Comments

[Jason Rines...:]

Great! Let's crank up imports in agriculture, metals, coal and clean-burning coal technologies. Sounds like the start of a great new export business plan :)

2008 Nov 10 12:30 PM

[Jason Rines...:]

meant to add "crank up production and replace imports' That will eliminate confusion on my comment.

2008 Nov 10 12:31 PM

[OilyGasMiner:]

China's actions came by no surprise really. They're biggest trading partner is the States and consumers simply aren't selling. Chinese Exporters got burned prettty badly.

I can't imagine how the companies that Walmart made reduce prices must feel.

But all in all, if we check which countries owns the US DEBT we'll see that China is on top of that list.

One little currency trade could be devastating.

IMO China has the US by its stronghold.

2008 Nov 10 12:40 PM

[Roowns:]

It's not all about commodities price. The plan might boost the consume and give companies something to do, witch is good for USA companies too.
My fear is $586 billion is not too much, but may ease the global recession a little.

2008 Nov 10 01:11 PM