In This Section:
Foodservice Equipment Reports Cuts E&S Forecast
Blue Chip Slashes GDP Forecast; Spending, Income Fall
International Growth Forecasts Also Falling
This issue's Regulatory Report Sponsor: Enodis
Industry ReportSponsor: FHA2008
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Foodservice Equipment Reports Cuts E&S Forecast
In light of deteriorating operator sales, slowing jobs and income growth and other factors, Foodservice Equipment Reports has revised its forecast of 2008 foodservice equipment and supplies market growth downward. Still, the new forecast remains in positive real territory, with projected real growth of 0.5% in '08. Nominal growth is now slated at 3.9%. The previous '08 revision, completed in late October '07, had growth at 1.5% real and 5.9% nominal.
"Nearly all the economic and foodservice indicators we follow have turned south," FER Publisher Robin Ashton told an audience at the magazine's biennial Multiunit Foodservice Equipment Symposium in Austin, Texas, Feb. 18, where the revised forecast was presented. "Still, the continuing strength of capital spending plans by large chains—even many in the battered casual-dining segment—as well as growth in key noncommercial segments, leads us to believe growth will remain positive in real terms this year."
The revised and updated forecast is now available. The PowerPoint deck includes updated data on macroeconomic, operator and materials price trends, as well as the forecast revision.
Those who attended FER's President's Preview Forecast Meeting last August, or have purchased the forecast since, can obtain the revision for no charge by requesting a copy via e-mail to rashton@fermag.com. Others can purchase the revision for $249. Further details can also be obtained by calling 800/986-9616.
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Section sponsored by Manitowoc Foodservice Group
Blue Chip Slashes GDP Forecast; Spending, Income Fall
The more than 50 leading economic forecasting groups polled monthly by Blue Chip Economic Indicators dramatically cut their forecast of U.S. economic growth in the early February survey. The consensus forecast of real growth of gross domestic product for 2008 fell half a point from the January consensus, to 1.7%. The forecast for growth in '09 also fell, to 2.6% from 2.7%.
The first part of the year is forecast to be particularly slow. The economists peg first quarter '08 GDP growth at just 0.5%, the second quarter at 1.1%. Growth is expected to accelerate later in the year, reaching 2.5% in the fourth quarter
Perhaps most worrisome for foodservice, the economists also cut their forecasts for personal consumption expenditures and disposable personal income. The '08 forecast for PCE now stands at just 1.7%, a 0.4-point drop from January's forecast, and the lowest level of PCE growth since 1991. PCE was 2.9% in '07 and ranged from 3.1% in '06 to 3.6% in '04. The forecast for disposable income was also cut 0.1 point, to 2.3%.
And while economic growth is softening, the outlook for inflation continues to rise. Blue Chip economists now predict the Consumer Price Index will rise to 3% on an annualized basis this year, up 0.1 point from last month's forecast. And this was before the most recent CPI data, released last week. The new numbers had the core rate, the rate minus food and energy, rising a surprising 0.3% in January.
International Growth Forecasts Also Falling
Despite all the talk of the "de-coupling" of major economies from the U.S. market, forecasts of gross domestic product growth for most of the world's economies continue to fall.
GDP forecasts for the Eurozone, Japan and even mighty China were lower in the February Blue Chip Economic Indicators survey. Projected '08 GDP in the Eurozone was cut 0.1 point, to 1.8%. The two largest Eurozone economies, Germany and France, are forecast to grow 1.9% and 1.8% respectively. GDP growth in the U.K. is pegged at 2%.
Japan looks to grow just 1.4% this year. China, which has been trying to curb growth as inflation rises, is forecast to grow 10.1%, down 0.1 point from last month's estimate. GDP growth in China was 11.3% last year and 11.1% in '06. Forecasts for most of the other Asian economies were also pared slightly.
Bucking the trend, growth in Brazil is expected at 4.6%, up 0.1 point from last month's consensus. Forecast GDP growth in Canada and Mexico were each down 0.1 point, to 2% and 3% respectively.
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