Cinnamon Rolls, Pepsi & Other Economic Indicators
According to business reporters, recession warning signs can be found everywhere.
You don't need to turn on CNBC or hear a Bloomberg Radio report about the failure of sub-prime mortgages to spot the approaching market downturn.
Forget about Wall Street.
Instead, just take a look at Main Street.
In fact, today's New York Times suggests that you can forecast the economic outlook by analyzing beverage and dessert orders at your local diner:
When Annie Cox is unsure if the economy is headed south — a question on the minds of many on Wall Street and Main Street these days — she keeps an eye on the orders for beverages at the diner she runs in Oklahoma City.
In recent weeks, Ms. Cox said she had seen a slight drop-off, leading her to believe that business could slow in coming months. “When they start ordering water instead of tea or Pepsi, that means they’re cutting back,” said Ms. Cox, who runs the 1950s-style restaurant, Sherri’s Diner, that is named after her mother...
...“There are essentially two consumer economies right now, and they parallel the split between the very rich and everybody else,” said J. Walker Smith, president of Yankelovich, the consumer research firm based in Norwalk, Conn. “There is one part of the consumer economy that is unlikely to be affected at all by the recent events in the financial markets. Those are the people making the loans. The people taking the loans, however, are the people who are affected.”...
...In much of the country, Americans cannot change their driving habits easily or in the short term. But consumer behavior experts say gas prices could force people who may already be stretched thin by debts to cut back. Families facing a higher house payment or the loss of a job will probably go out less, buy fewer clothes or spend less on entertainment...
...Mr. Smith of Yankelovich echoed the sentiments of Ms. Cox in Oklahoma City in highlighting how consumers may change their spending: “Some of our restaurant clients joke that they know when the economy is starting to head down by dessert sales,” he said.
Consumers always start by eliminating the purchases they see as unnecessary. “They begin to eat out differently. They eat out less. Often they trade down to lower-priced restaurants. And they quit buying all the extras like dessert.”
For her part, Ms. Cox is confident that her business will survive even if customers stop buying dessert. After all, she’s seen worse.
“We made it through the last two recessions just fine,” she said. “You just have to be resourceful.”
Ms. Cox and her diner's cinnamon rolls are pictured above. Look yummy, don't they?
Question: If I go out to Oklahoma City and buy up all of those gorgeous cinnamon rolls and drink Sherri's Diner out of Pepsi, will the U.S. markets improve?
Well, just in case, I recommend we all do our part. So this weekend, visit your local diner and buy a dessert or beverage in the name of a strong American economy!