“Restaurant Recovery” Is Over: Casual Dining Sales Tumble For Fourth Straight Month

Posted: March 29, 2016 in Uncategorized
Tags: , , , ,

While the US manufacturing sector has been in a clear recession for the past year as a result of the collapsing commodity complex, so far the stable growth in low-paying service jobs – at least according the BLS’ statistical assumptions – such as those of waiters and bartenders have kept the broader service economy out of contraction (even though recent Service PMI data has been downright scary).

waiter%20bartender%20vs%20MFG%20since%202007_0

This is now changing: as shower a month ago, according to the lagged effect of the collapse of the Restaurant Performance Index, that party is over:

20160218_food1_0

…..just like it was in 2008

20160218_food2_0

But while such macro indices suffer from the same calendar and statistical aberrations which the BLS is all too famous for, a confirmation of the troubling restaurant downward trend was provided yesterday by company-level channel checks, courtesy of Sterne Agee, which show that same store sales trends at America’s casual dining restaurants – those which cater to the vast majority of the US middle class – have suffered a fourth consecutive month of declines, something not observed since the first financial crisis, sliding a whopping 3% in March.

However, it is becoming all too obvious that not only has the great gas price collapse of 2015/2016 done anything to boost consumer spending on such core discretionary items as dinner, but that the purchasing power of the US middle class continues to deteriorate with every passing month – having troughed so far in March – and that economists are clueless to explain the reason behind this.

And the worst news is that with gas prices set to anniversary their 2015 lows in a few months at which point they will start rising due to the base effect, suddenly the great “gas tax savings” which did nothing to boost spending, is about to go into reverse, and lead to the next even sharper leg lower in US household spending. We are confident economists will be very confused about the reasons why the US economy is about to deteriorate substantially in second half, however surely they will find some climatic anomaly to blame it on.

 

 

 

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