Two years ago, almost to the day, Bloomberg published a forecast saying that the chance of a recession in the next 12 months hit 100%.
So much for that idea. The economy has had its issues in that period, but it has not been recessionary.
On Friday, the economy added 254,000 jobs, with the unemployment rate at 4.1%. Restaurants in particular were robust in their hiring, with 69,400 jobs added in September, on top of another 21,000 in August from an upward revision.
The jobs report was the second bit of good news for the economy in about 20 hours, following news late on Thursday that the port strike would be short-lived—saving the U.S. economy, and restaurants in particular, of a potentially troubling couple of weeks on the supply chain front.
Some consumer data has been somewhat mixed recently. Consumer confidence rose in September to a five-month high, according to the University of Michigan. A different survey from the Conference Board showed it fell during the month, largely over concern about jobs.
A report in August by the consulting firm McKinsey, however, showed the highest level of consumer optimism in a year.
Other indicators could also point in a positive direction, at least when it comes to consumer spending: Gas prices, which often influence spending at fast-food and some casual-dining restaurants, are down 16% over the past year.
Job growth tends to be the biggest indicator of restaurant sales. If people have jobs, that means they have income to spend. It also means more people are in the office, though increases in telecommuting have muted that impact somewhat.
Generally speaking, however, the economy has performed far better than many have predicted, enough that it appears the Fed will accomplish the rare “soft landing” it looked for when it started raising interest rates nearly three years ago.
Economic growth can also help explain some of the oddities of the restaurant market right now.
Much of the headlines over the summer have been unfriendly to the state of restaurants. Consumers have cut back on dining out. At least 20 restaurant chains landed themselves in bankruptcy, while many others are teetering close to it, including big-name companies such as TGI Fridays and Hooters.
Yet other chains, notably Chili’s, Wingstop, Cava and Raising Cane’s, among others, have thrived.
A sales dichotomy like that isn’t entirely unusual. But jobs and economic numbers suggest a consumer that is willing to spend, but is frustrated by the state of prices.
Indeed, a survey of 1,800 adults from R.R. Donnelley & Sons found consumers at all income levels frustrated with prices across categories. That suggests traffic declines may simply be the root of the price hikes, rather than any broad-level economic concern.
All of which suggests that restaurants have the opportunity to get customers in the door with the right type of marketing, rather than simply relying on discounts.
Regardless, the economy has remained remarkably resilient over the past couple of years. Given all the challenges it has faced over that period, including generationally high inflation, geopolitical events and a certain presidential election, that is something to celebrate.