Falling commodities prices, foreign currency values, and interest rates combined to make life less expensive for Americans this week. Lower household expenses are especially welcome after recent reports showed that Americans' take-home pay hasn't been rising in the past few months.
Pork gets Pounded
Hog prices collapsed this week, falling to the lowest level in over four years. Hogs are wallowing as supplies overwhelm the market, leading to deep discounts for consumers.
Last year, a virus ravaged the hog herd, killing off piglets and pushing prices to record highs near $1.34 per pound during the summer. Since then, the virus has been largely brought under control and the breeding herd has been rebuilt, causing prices to be cut nearly in half to Friday's price of only $0.69 per pound.
Going forward, hog producers are likely to scale back expansion plans as falling pork prices and steady grain costs hurt their bottom line, which could eventually restrict supply and help prices rebound.
Crude Dives Down
Crude oil prices tumbled again after the Department of Energy released a report Thursday showing that US crude oil inventories swelled to the highest level on record. Supplies continue to rise as US production stays high, even as refineries reduce their consumption.
Falling crude oil prices have helped pull gasoline futures lower, trading at a five-year low on Friday for $1.35 per gallon, a value which represent prices without taxes or other expenses included.
Without a reduction in production or a geopolitical shock, analysts expect that prices could remain near these low levels in coming months, which would be a dream for drivers but a nightmare for petroleum companies.
The European Central Bank announced a massive bond-buying program this week, similar to the USA's Quantitative Easing program. In an effort to support Europe's flagging economy, the ECB will inject 60 billion euros each month. The hope is that this effort will lower interest rates and allow Europeans to spend more freely, eventually boosting the economy.
While the announcement seemed to have the intended effect of lowering interest rates, it also hurt the value of the euro. Investors fled the low-yielding euro in favor of the US dollar, knocking the euro to an eleven-year low on Friday at $1.13.
For Americans, a lower euro means that they can buy European goods at a lower price and that a summer trip to Paris, Berlin or Rome suddenly got much more affordable.