The pandemic catalyzed inflation in the United States, creating rifts in the supply chain while forcing the American government to pump stimuli into the economy. Services have become increasingly more expensive, as workers have been reluctant to return to pre-covid work. Factory closures have impacted food prices, while the Russian invasion of Ukraine has damaged gas and energy production, subsequently causing those prices to skyrocket. The federal reserve has been trying to raise interest rates to counteract the rampant inflation, but they have had little success. Inflation has leaked further into the American economy than just physical goods and services, threatening areas ranging from dental care to hotel rates. The Fed continues the strategy of increasing borrowing costs to slow spending, and then rein in prices, but the US economy remains at a 7.7% inflation rate*. This year, inflation has been at its highest level since the early 1980s, raising the price of goods at a rate that is significantly more than the growth of American wages.
For retailers, the fourth quarter is always the biggest as the holiday season approaches. Despite inflation, retailers can look forward to seeing some of their biggest earnings yet this year. Black Friday experienced a record-high 196.7 million people rushing back to stores to catch the best deals, while Amazon's online sales surged on Cyber Monday. Eric Swanson, an economics professor at the University of California, Irvine stated, “most people in America spend pretty much their whole budget anyway… So the money is going to get spent, it’s just a question of what it’s going to get spent on.” This is good news for big corporations, as though the average American is becoming significantly poorer relative to the costs around them, the large monopolies will continue to capitalize on their gains this holiday season. The healthcare and retail industries have not only been virtually unaffected but they actually have seen some of their largest profits ever this year.
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| Black Friday at Walmart |
But, most importantly, inflation is affecting how much the average American will have to spend during these holidays. Americans saw Thanksgiving feasts cost 20% more than last year, and 40% more than in 2020. The average box of stuffing went up 69%, pie crust went up 26%, and dinner rolls became 22% more expensive than last year. Turkey, the staple of Thanksgiving went up 21%. Its high cost can be attributed to not only inflation but a deadly strain of avian flu that wiped out 49 million turkeys this year. All in all, many Americans had to spend significantly more on their Thanksgiving feast this year.
As Christmas approaches, it is likely that we will continue to see the trends from Black Friday and Thanksgiving. The corporations will continue to flourish while the average American will be left seeing a lot less bang for their buck.
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*As of November 2022
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