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Click to enlarge.
I believe that we may eventually see inflation adjusted restaurant sales per capita fall to 1996 levels (or worse).
As we felt more prosperous, we ate out more. That prosperity was based on stock market, housing market, and credit bubbles though. It was an illusion.
In any event, I strongly believe that there is zero chance that we will ever return to the red exponential trend line established between 1996 and 2007. That trend has failed and there is no going back. Each month we drift further and further away.
It is just one of many exponential trend failures that we've seen over the last decade. I doubt it will be the last. I therefore continue to be bearish on our restaurant industry and the 9.5 million jobs found within it.
Click to enlarge.
Before pain hit the housing market we were told that people always need a place to live. In hindsight, people can be fairly creative. We are told that people also always need to eat. The fast food industry is now attempting to be equally creative. Go figure.
This is not investment advice. I am not shorting the restaurant industry. I'm simply an observer hoping to partially avoid the ongoing carnage.
Source Data:
U.S. Census Bureau: Retail Trade
St. Louis Fed: CPI
St. Louis Fed: Population
6 comments:
wow, falling back to the 2003 level would be a million jobs gone.
Did you pencil in the exponential trend line from 2007 onward or did the software do it?
Troy,
Keep in mind that the first chart is per Capita and the 2nd chart is not.
That said, 2003 wasn't all that long ago. I do think it is possible.
Anonymous,
The simple answer is that the software did it.
I created the trend line using Excel's [exponential] "growth" function based on the data from January 1996 to December 2007. That function also allowed me to extrapolate the trend for periods before 1996 and after 2007.
Put another way, if the trend that was in place from 1996 to 2007 still applied then we'd be seeing $145 per month restaurant sales per capita right now. We're clearly not. Trend broken.
"...created the trend line using Excel's [exponential] "growth" function..."
That's what I figured. I wonder, does the exp. func. adjust downward as the data does in the same way that Excel's linear line would?
What I mean to say is, if you ended your source data at Dec. 2007 would the line move slightly upwards and, subsequently, the $145 number would in fact be higher if not accounting for the data since 2007 that no one in the media wants to admit to?
Anonymous,
The trend line ignores all data after 2007. The trend would therefore be identical to what it would be if I had done the chart in December 2007 and extrapolated it forward to today.
If I would have included all the data then the trend line would have been pulled up to the $105 level on the left side of the chart and down to the $135 level on the right side of the chart.
I chose not to do that because it is obvious in the data that the trend broke when we entered the recession in December 2007.
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