Foodservice Equipment Reports

Tidbits From FER’s 2014 E&S Forecast

We’re finishing up the eight PowerPoints we present next week at our annual President’s Preview E&S Market Forecast meeting, being held Aug. 7 at the Westin O’Hare in Rosemont, Ill. We thought we’d share a few of the highlights.

As far as the general economy in the U.S. is concerned, it’s looking a bit better, at least for now. Jobs growth has been stronger than most economists expected, averaging nearly 200,000 new jobs a month. This has buoyed consumer confidence, which is running near post-recession highs, though hardly yet robust. More confident consumers generally buy more foodservice.

Still, key drivers such as disposable income and consumer spending growth remain weak this year. Gasoline prices, after a surprisingly calm spring and early summer, spiked a bit, but seem to have settled again. We’ll call these factors a draw, at least for this year.

On the positive side, the consensus forecasts from the 50 economic groups polled monthly by Blue Chip Economic Indicators, auger an improving economy in 2014. That includes stronger growth of gross domestic product, disposable income (almost two full points higher) and spending by both consumers and businesses. They also see continuing improvement in the employment and housing pictures.

Also positive is the delay of implementation of the employer mandate of the Affordable Care Act. This has postponed operator concern about the cost implications.

But there’s a looming shadow on the brighter outlook: The politicians in Washington are poised to screw us all up again this fall. There will be a budget fight and a debt-ceiling fight, and some in Congress are talking about shutting down the federal government unless the ACA is defunded. In other words, our severe political dysfunction, which mirrors a real ideological divide in the country, will undercut to some extent an improving economy.

Operators, in spite of the threats (or probably because they haven’t registered them yet) remain quite optimistic about their near-term prospects. The National Restaurant Association releases its June Restaurant Performance Index today, July 31, so we’ll get the latest reading. But in the May survey, all eight components of the RPI were in positive territory. That’s the first time all eight have been above the 100 level that separates expansion from contraction since 2007. We declared it the true end of the Great Foodservice Recession, the worst foodservice downturn of our lifetimes.

I always tell people I’m a conservative optimist when it comes to forecasting. We never hurt anyone by predicting market growth will be slower than it in fact turns out to be. I think the E&S market next year will be better than this year. (Most Americans are sick to death of the political gridlock and will just ignore it and get on with their lives and personal economies.)

How much better? For now, you gotta pay your money and come to the meeting. (Details are here on our website.) We still have some open seats and will have a few extra forecast books and memory sticks. Come join us, or if you’re tied up, you can buy the package after the meeting for $1,295. It’s the best base there is for planning your budget next year, and a true bargain, in our humble opinion. 


Robin Ashton


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