In This Section:
NRA Performance Index Slips Again
U.S. Economy Grew In First Quarter, Barely; Fed Cuts Interest Rates Again
Consumer Sentiment Hits 26-Year Low, Or Five-Year Low, Depending On Who's Counting
Be An Early Bird For FER's President's Preview Forecast Seminar
This issue's Regulatory Report Sponsor: Enodis
Industry ReportSponsor: Server Products
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NRA Performance Index Slips Again
The general economy may not be in recession, at least not yet, but the restaurant market, as followed by the National Restaurant Association, is contracting. The group's Restaurant Performance Index fell nearly a full point in March to 97.9, its lowest level since the Index was launched in the summer of 2002. It's the fifth consecutive month the Index has stood below 100, the stable dividing line between expansion and contraction.
Six of the eight index components fell in March. Big drops in same-store sales and traffic, 3.2 and 2.8 points respectively, drove the overall Current Situation Index down 1.5 points. Only the indicator signaling a capital expenditure during the past three months was higher, by a mere 0.1 point.
The Expectations Index was down 0.3 point, as drops in expected sales, staffing and capital expenditures pushed the marker down. On a dim positive note, the indicator of expected business conditions in six months rose 0.4 point.
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Section sponsored by Manitowoc Foodservice Group
U.S. Economy Grew In First Quarter, Barely; Fed Cuts Interest Rates Again
The U.S. Department of Commerce reported that real gross domestic product inched up in the first quarter by 0.6%. This follows a similar increase in the fourth quarter 2007. The report came from "early" data, and preliminary and final reports might be different.
Many economists cautioned that the gain came primarily from an unexpected increase in inventories, a trend sure to reverse itself, as both consumer and business spending remain weak or negative. Consumer spending, which accounts for 70% of the economy, rose only 1% in the quarter. It was the lowest gain in such spending since the second quarter of '01. Business spending fell 2.5%. Spending for residential fixed investment, that is, housing, fell by 26.7%, the biggest drop since 1981.
Meanwhile, the Federal Reserve Bank, as expected, clipped another quarter point off its target Federal funds rate, to 2%. The Fed has now lowered the rate 3.25 points since the sub-prime mortgage crisis began last summer. Observers widely expect the reduction to be the last such cut for a while, as the Federal bankers worry about inflation.
Consumer Sentiment Hits 26-Year Low, Or Five-Year Low, Depending On Who's Counting
It's amazing what dropping home values and rising prices for energy and food are doing to consumer psyches. The Consumer Sentiment Index maintained by the University of Michigan Surveys of Consumers hit a 26-year low in the final April reading, released by Reuters April 25. It was the lowest reading since March 1982, the days of "stagflation." Nearly nine of 10 respondents indicated they believed the economy is now in recession.
A few days later, the Conference Board said its Index of Consumer Confidence hit a five-year low, the lowest since March 2003, when the Iraq War began.
Whichever indicator you prefer, consumers have the blues. Of course some of this is real—housing values are falling, prices are rising and jobs growth has gone south—but some of it is perception. As the University of Michigan release put it, "Never before in the long history of the surveys have so many consumers reported hearing news of unfavorable economic development as in the April survey."
Meanwhile, McDonald's reported another rise in same-store U.S. sales in March and for the first quarter.
Section sponsored by Manitowoc Foodservice Group
Be An Early Bird For FER's President's Preview Forecast Seminar
Save some money and sign up now for Foodservice Equipment Reports' annual President's Preview Equipment And Supplies Market Forecast meeting. The seminar will once again be held at the Eaglewood Resort and Spa in Itasca, Ill., on July 30. The early-bird seminar fee saves you $100.
The meeting features the magazine's hard-number forecasts for E&S market growth in 2007 and '08, and includes a wealth of data on general economic, operator and materials and E&S price trends.
The meeting is one day, and most attendees can fly in the day of the meeting. A limited number of hotel rooms at Eaglewood are also available for July 29. Seminar fee is $845 before June 20, $945 after.
Information on registration and the hotel is available at www.fermag.com/events/index.htm or by calling Jessica Scurlock or Robin Ashton at 800/986-9616.
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