The restaurant industry is contracting. This is bad news for the millions employed by restaurants but also a serious indicator that people are cutting back on discretionary spending. When times get tight, dining out is one of the first things to go.
Restaurant industry suddenly tanks, worst plunge since the beginning of the financial crisis
Plunges like this only occur when something big is going on.
The National Restaurant Association just released its Restaurant Performance Index for December. And it suddenly plunged.
“As a result of broad-based declines in both current situation and expectations indicators,” – as the report started out – the RPI for December fell to 99.7, from 101.3 in November and from 102.1 in October, 2.4% in two months, the worst two-month plunge since early 2008, at the cusp of the Financial Crisis.
In addition to this restaurant canary in a coal mine, other indicators point towards a wobbling economy.
Nonfarm Productivity collapsed by 3% QoQ, notably worse than expected as labor costs jump.
Highest January layoffs since 2009.
It’s probably nothing”: January truck orders collapse 48%.
Also, low oil prices are creating carnage in energy-related industries. Yes, oil companies are baddies, boo hiss, however thousands are losing their jobs and that means lots of pain. Plus, China is doing poorly and that will have negative consequences here too.