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What is the Big Mac oracle telling us?

Smith made his video after reading a CNN story about how McDonald’s customers are pushing back against price increases.

McDonald’s CEO Chris Kempczinski told CNN that the franchise had seen a decrease in customers who made $45,000 a year in the last quarter of 2023. He admitted that this is because McDonald’s has raised its prices by 10% that year — which reaffirmed Smith’s point.

“A lot of people are drowning,” Smith said. “Housing and rent and college debt and daycare and now McDonald’s!”

Smith has made many videos in the past about how expensive certain necessities have gotten, from rent to food.

Meanwhile, many young people are still living at home or being supported by their parents — not because they want to, but because they feel they have no other choice.

Now, it looks like McDonald’s will join the long list of things they might not be able to afford.

“There’s gotta be some light at the end of the tunnel,” Smith said. “Are we living through the takeover of the middle-class?”

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The Big Mac Index

Smith isn’t the first person to notice that McDonald’s prices are often correlated with economic change.

The Economist keeps track of this with their Big Mac Index. The magazine uses the price of the ubiquitous burger in different countries to measure the value of world currencies against the U.S. dollar. Because McDonald’s is the same everywhere — and still relatively cheap compared to most other restaurants — it’s a good economic barometer.

For instance, a Big Mac costs $5.69 in the U.S., as of the Index’s most recent numbers from December 2023. In Switzerland, the same burger costs 7.10 Swiss francs. Based on Big Mac prices alone, the implied exchange rate between the two countries is 1.25. But the actual exchange rate is 0.87. Therefore, the Swiss franc is 43.5% overvalued.

Over time, the price of a Big Mac has steadily risen. The Economist reported that a Big Mac cost $4.71 in December 2018 in the United States — almost a full dollar less than the same month in 2023.

Would you like some fries with that?

Smith encouraged McDonald’s lovers to get out there and fight back.

“When are you going to start complaining?” he asked. “How much does a McDouble have to be before you kinda go, ‘This is a little bit ridiculous.’”

But your Happy Meal may get even more expensive than the national average if you happen to live in California. In April 2024, the new government regulations will begin to pay fast food workers the country’s highest guaranteed base pay in the industry: $20 per hour.

However, commenters on Smith’s video suggested that it’s corporate greed that they’re complaining about, not the workers’ wage increases.

“Remember when they told us ‘if the minimum wage goes up so will the prices of their stuff?’” one commenter wrote. “But then the wages didn’t go up and the prices did anyway.”

Smith wants to see more people complain. Although he doesn’t have any action plan in place, you may want to think twice about running into McDonald’s for a quick and cheap lunch — because it just might hit your wallet a bit harder than you expected.

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Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.

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