Despite the optimistic narrative propagated by certain sections of the media, the United States is currently grappling with a recession. A careful analysis of recent economic data and trends paints a different picture than what’s commonly reported.
Economic Indicators Point to a Recession
The National Bureau of Economic Research (NBER), which determines the official start and end dates of US recessions, has yet to declare the current economic situation as a recession. However, several indicators suggest that the economy is indeed contracting. These indicators include GDP decline, unemployment rates, and the probability of a recession.
Data from the Federal Reserve Bank of St. Louis shows that GDP growth has started to contract from 2022 and into 2023. While the US GDP growth defied expectations in late 2022 and early 2023, recent data points towards an unexpected contraction.
Unemployment rates, another key economic indicator, also suggest a downturn. A comparison with past recessions shows that the unemployment rate reached a high of 10% during the 2009 recession, and similar figures are starting to emerge now.
The probability of a US recession also remains elevated. Statista reports on a monthly projected recession probability that indicates an increased likelihood of a recession.
Impact on the Hospitality Industry
The hospitality industry, particularly the restaurant sector, is often one of the first to feel the effects of an economic downturn. Same-store sales are a crucial barometer of the health of this sector.
Same-store sales, or comparable store sales, is a financial metric that compares the sales of stores open for a year or more. Unfortunately, recent statistics on same-store sales year over year reveal a troubling trend.
While specific statistics for 2023 are not readily available, we can look at the trend from previous recessions to understand the potential impact. During the 2008-2009 recession, the restaurant industry saw a significant drop in same-store sales. This decline was a direct result of reduced consumer spending due to economic uncertainty.
If the US is indeed in a recession, as the data suggests, we can expect similar trends for the hospitality industry in 2023. As consumers tighten their belts, discretionary spending on dining out and travel may decrease, leading to a fall in same-store sales.
In conclusion, while media narratives may suggest otherwise, the data points towards an ongoing recession in the US. This recession is likely impacting all sectors of the economy, including the hospitality industry. The situation calls for careful monitoring and adaptive strategies to navigate these challenging times.
