July 18, 2013
On one hand restaurants and bars have been a boon to the US economy. As first reported in June, and updated two weeks ago, America’s waiters and bartenders (increasingly more of which are part-time) have made up a disproportionately large portion of job creation in the nation, rising by more than 50,000 on average each month in the last three, and hitting an all time high of 10.34 million workers in July, accounting for 9% of all private-sector payrolls. The surge was enough for Joel Naroff of Naroff Economic Advisors to conclude that “Apparently, people are eating out again like crazy.” It turns out this conclusion was 100% wrong.
According to this week’s very weak retail sales report, Food-service sales fell 1.2% in June, the largest decline since February 2008 and the year over year change in “eating out” rose by just 3.1% – the lowest annual increase since June 2010. But at least all those empty restaurant seats have a record number of waiters catering to the non-existent clients which on the surface should mean the speediest service in history.
The WSJ comments:
Restaurants and bars account for only 11% of total retail sales. But spending at those locations is largely discretionary and could signal Americans’ confidence in the economy. Meals out can be skipped more easily than trips to the gasoline pump or grocery store.
In other words, yet another example of “capital misallocation” where either restaurants are hiring record numbers of workers to cater to demand that just isn’t there or the BLS is simply extrapolating payroll numbers based on historical trend averages and which reflect nothing but what some statistical model says the waiter and bartender jobs should be.
Of course we all know that the reason Americans aren’t eating out any more is simple: they are all staring at their E-trade trading portals, generating their own personal wealth effect.
This article was posted: Thursday, July 18, 2013 at 11:21 am