Restaurant Recession Could Signal Tough Times for U.S. Economy

(Andrew Soergel , US News) Analysts are forecasting a “restaurant recession” in the U.S., which is bad news for America’s food and drink establishments and potentially even worse news for the economy at large.

Paul Westra, a senior research analyst at Stifel Financial Corp., said in a research note Tuesday that he’d turned “decidedly bearish” on the restaurant industry, downgrading Stifel’s stance on 11 different restaurant stocks, including Chipotle Mexican Grill, Panera Bread and Cheesecake Factory.

He and his colleagues now “confidently believe” that the weak restaurant consumer spending seen in the second quarter of the year “reflects the start of a U.S. restaurant recession.”

“The catalyst for the current weak pre-recessionary restaurant spending trend is likely multifaceted – U.S. politics, terrorism, social unrest, global geopolitics, economic uncertainty,” Westra said. “But, if history is a guide, we warn investors that restaurant-industry sales tend to be the ‘canary that lays the recessionary egg.'”

Restaurants aren’t themselves a monumental driver of America’s gross domestic product, but they’re usually a pretty good indicator of what Americans are doing with their money. When times start getting tough, eating out is typically one of the first things to go. Click here to continue reading