Gross domestic product increased by 2.6% in the third quarter of 2022, per an advance estimate from the U.S. Bureau of Economic Analysis. For the two previous quarters, the BEA reported GDP had contracted, including a 0.6% decline in the second quarter. On the surface, this is a dramatic improvement in the economy, but as the BEA reported, the substantial increase was due in part to the “effects of selected Federal pandemic response programs on personal income” and other factors. One of those factors was a narrowing trade deficit, which economists expected but don’t believe will be repeated in future quarters, per published reports. Gains also came from increases in consumer spending, nonresidential fixed investment, and government spending. Spending on services increased by 2.8% while spending on goods spending dropped by 1.2%.
Personal income increased 0.4% for a total of $78.9 billion in September, per estimates from the U.S. Bureau of Economic Analysis. Disposable personal income also increased by 0.4% for a total of $71.3 billion and personal consumption expenditures increased by 0.6% for a total of $113.0 billion. As a result, the PCE price index increased by 0.3%. Excluding food and energy, the PCE price index increased by 0.5%. Real DPI increased by less than 0.1% in September and real PCE increased by 0.3%.
Sales of new, single-family homes totaled 603,000 in September, per data from the U.S. Census Bureau. This represents a 10.9% decline from August and 17.6% less than September 2021.
Manufacturing activity in the New York area posted a modest decline in October, per the New York Federal Reserve. The general business conditions index came in at -7.6, a 9.1-point decline. The shipments index declined 19.9 points for a reading of -0.3. The unfilled orders index totaled -3.7 in October, which represents an improvement compared to September’s reading of -7.5. The new orders index was unchanged.
The Conference Board’s Leading Economic Index declined 0.4% in September for a reading of 115.9. This comes after it was unchanged in August. The LEI declined 2.8% over the 6-month period between March and September 2022, a reversal from its 1.4% growth over the previous 6 months. The Conference Board believes this decline sends a message a recession is “increasingly likely.”
The University of Michigan Index of Consumer Sentiment totaled 59.9 in October, a 1.3-point increase from September. The survey now remains just 10 points greater than its all-time low, which it reached in June. A spokesperson from the university’s research department the risk of a recession has been reinforced.
Foodservice News This Week
The number of restaurants has shrunk by 3.9% since February 2020, per Chicago-based market research firm Datassential. Of course, given the industry’s well-documented woes over the past few years, this decline should come as no surprise to anyone. Only seven restaurant/foodservice operator segments have had positive growth rates since the onset of COVID. Buffets are the segment that lost the most locations, per Datassential. In contrast, the segment adding the most units were vegetarian and special dining restaurants. Of course, this was a smaller group compared to other segments, making it easier to post larger growth rates. Make no mistake, though, consumers’ appetites for plant-based menus remain strong. In terms of restaurant operating hours since COVID, 19.8% of operators have reduced their hours, 21.6% report no change in hours, and 58.6% have reduced their hours of operation, per Datassential.
Customer traffic during the breakfast daypart grew 4% in August compared to the same month one year ago and is now within 1% of recovering pre-pandemic traffic levels, per The NPD Group. Quick-service-restaurant breakfast, representing 87% of restaurant breakfast traffic, increased visits by 5% in the month compared to a year ago. The August traffic growth for QSR breakfast was 1% greater than what it was in August 2019. Total QSR traffic was flat in August, with lunch visits down 2%, and dinner traffic up 1% in the month compared to August 2021. “Breakfast at restaurants was adversely affected in the early stages of the pandemic, and it’s recovering now that more consumers have returned to more out-of-the-home routines,” says David Portalatin, NPD food industry advisor. “Breakfast is an important daypart for the U.S. restaurant industry, and it’s encouraging that consumers have found new reasons and ways to get breakfast away from home.”
McDonald’s quarterly financial results exceeded the number of forecasts. Global same-store sales increased by 10% with U.S. same-store sales up 6.1%. McDonald’s attributed the performance in the U.S. to “strategic menu price increases and positive guest counts.” Wall Street evidently liked what it heard as McDonald’s stock hit an all-time high.
The next big restaurant franchise could be ramen, per The Food Institute. No, TFI is not referring to the dry noodles sold in grocery stores. Rather, it sees an opportunity for restaurants to prepare an Asian dish that pairs rich broth with meat, vegetables, and flat easy-to-eat noodles. TFI notes this type of dish has considerable appeal to diners and culinary staff can prepare it in various commercial kitchens.
Thousands of New York City Restaurants claim outdoor dining saved them from extinction during the pandemic. Now 12,000 restaurants and bars are pressing New York City to open more sidewalks and streets for tables and chairs for their customers, per published reports.
It seems no menu item is immune to the ills of inflation, including the humble hot dog, per a report in the Chicago Tribune. Chicago dogs, for example, are known for the many toppings they feature, including mustard, onions, pickles, relish, sport peppers, tomatoes, and celery salt. Each of these ingredients has gone up considerably over the past year, forcing one Chicago operator to raise the price of its hot dogs by 20% compared to the same time last year. While the price has gone up, margins have gone down, making the hot dog another good example of the challenges operators face.
The National Restaurant Association added Jordan Heiliczer to its public policy team, serving as labor and workforce policy director. In this role, Heiliczer will spearhead the NRA’s efforts to “protect the restaurant business model, rebuild the workforce, and drive innovative training and workforce initiatives.”
Growth chains: Philadelphia-based fast-casual chain Honeygrow opened its 30th location in the Keystone State. Twin Peaks will open a restaurant at the Texas Motor Speedway in December. Carrabba’s opened a location in Tampa, Fla. It is the first restaurant the Italian restaurant chain has opened since 2015.