Sigh. The pooring of America has taken a very dark form - the return of Spam.

I somewhat joked about this in a few previous entries, one regarding the measure of inflation by the government (i.e. substitution effect) (Apr 8: Now on to Airline Inflation)

Now the way the government reports inflation they have a cute thing called "substitution" - when something gets too expensive (beef) their measurements assume you move down (substitute) to a lower value item (say... spam) - so hence your inflation is flat or maybe even goes down. That's the magic of government reporting.

And just a few weeks ago in one our earnings roundups I mentioned how we will trade down to Hormel's jewel of a product

Dicks Sporting Goods (DKS) - while this is a Wall Street favorite this is exactly the type of product that a poorer America will have to cut back spending on. So instead of going out and playing golf or sports that actually require exhaling at a fast rate, we will continue to sit on our behinds and play video games from Gamespot (GME). And instead of eating healthy, we'll be eating cheap - such as SPAM from our friends at Hormel (HRL).

So it is here folks; the substitution effect is in full force. This means as Americans have moved from steak (2004, paid for by home equity) to hamburgers (2006, hmm my home went down in value and my wages are not keeping up with gas prices) to... spam (2008, recession? what recession - government reports say everything is rosy!), the government can now say inflation is negative. Because as you move down the (ahem) food chain, they consider that a cost savings to you and hence you are paying LESS for food. And as I've outlined multiple times, the real rise in meat products has YET to come (Update on Corn and Livestock). Heck, there is even Spam inflation! (7% year over year). No shelter in the storm.