Economic Data Tracker – 
U.S. weather extremes punching data, while agricultural prices remain elevated

Trend watch

We’ve begun to see the impact from the California wildfires rippling into the activity-based data (slides 5 and 6). For instance, the Kastle Back to Work Barometer Index, which measures anonymized building access data, shows that Los Angeles has been impacted, falling to a reading of 37 compared to 2024 average of 45.

Early total cost estimates for the California disasters, including rebuilding and economic loss, is now above $250 billion and climbing, according to AccuWeather. That would be greater than the total cost of the entire 2020 wildfire season.

Similarly, winter storms have impacted cities like Dallas, as the Kastle Back to Work Barometer fell to 42 after averaging 57 during 2024. 

Our take

Prices for many agricultural products have jumped dramatically in recent months. Egg prices have spiked 170% from a year ago, while cocoa and coffee have jumped 160% and 85%, respectively. Milk prices are up 7%. One of the few exceptions is sugar as price have slid about 7.5% in the past year, though it is up about 130% since the pandemic.

Some of the increases have been driven by the roughly 20% jump in crude oil prices in the past year. Crude oil is a critical input for agricultural production from running the tractors to planting the crops and making much of the packaging.

Additionally, crude oil and natural gas are used as raw materials and energy in the manufacture of fertilizers and pesticides. Of course, crude oil is also needed to truck and ship crops to their end markets (and is used to make those roads).

If you’re thinking, “I thought this report was supposed to about the economy, not an ag report,” you’re not alone. However, food prices are 13.5% of the Consumer Price Index, which is the key inflation gauge.

Inflation tapered for much of 2024, and expectation were for that trend to continue in 2025. However, if the progress on inflation stalls or reverses somewhat, it could upend the Federal Reserve’s (Fed) plans to cut rates a few times in 2025. And we didn’t discuss the potential for tariffs pushing prices higher. 

Bottom line

With many policies expected to change with the incoming presidential administration and new Congress, uncertainty abounds for the economy. That is complicated by the razor-thin majorities in Congress and continued political dysfunction on Capitol Hill. That has contributed to the recent bouts of volatility in financial markets, which we expect will continue for the foreseeable future. Yet, the U.S. economy remains resilient, and we believe solid growth will endure. At this point, we expect the Fed to pause to digest incoming data and reassess conditions, which we feel is warranted given the uncertainty.