California drought could hit grocery store prices

Drought conditions in California's Central Valley could lead to food shortages and higher grocery prices nationwide.

Economists predict that the drought could cost 80,000 jobs and $2 billion in lost revenue. Empty reservoirs could lead many farmers to be cut off from their water sources sometime this spring. That could leave farmers with little choice but to leave some of their land unplowed and unseeeded.

Of course the parallels to the Dust Bowl are obvious: Along with Las Vegas, Phoenix and Miami, California is ground zero for the housing crisis, and now mother nature is joining the beat down with conditions that will make a big part of the state's economy less of recession-proof beacon than many had been counting on it to be.

Food prices rose 5.5% last year, but family spending on food fell 2.4% in the fourth quarter of 2008, a record fall driven more by frugality than falling food prices. Some experts expect that food prices will moderate somewhat in 2009, but those predictions could go out the window if they don't find more water in California.

Learn about investing from the comfort of your own home.

Portfolio Basics

Take the first steps to building your portfolio.

View Course »

Investment Strategies

Learn the strategies you need to build a winning portfolio

View Course »

Add a Comment

*0 / 3000 Character Maximum