When we talk about the potential of a recession, many immediately think of the traditional markers: two consecutive quarters of negative GDP growth, a spike in unemployment, or a noticeable dip in industrial output. Yet, what does it truly mean when household spending starts to diminish?
Regardless of whether the U.S. economy is technically in a recession, there’s a palpable sense of worry among consumers. Take, for instance, the University of Michigan’s Consumer Sentiment Index, which shockingly fell by 10.5% this March, its lowest since November 2022. It’s reminiscent of those times you could feel something wasn’t right, even before you saw any evidence.
Shengxing Zhang, an economist visiting Carnegie Mellon University, eloquently said, “Declining consumer confidence, the fact that they might reduce their consumption, would be an important sign that there may be a recession coming.” It makes one ponder: how much do our spending habits signal about our economic anxieties?
Perhaps you’ve noticed an economic vibe shift around you. Unconventional indicators, though often overlooked, might hint at broader economic vulnerabilities. While they aren’t foolproof markers of an impending recession, they certainly make for intriguing anecdotes.
Dining Out
Asher Rogovy, the chief investment officer at Magnifina, keeps a keen eye on restaurant and bar sales. Interesting, isn’t it, how dining habits can reflect our economic fears? “Restaurant spending provides an early view into consumer confidence because it’s one of the first expenses people cut when they’re worried about finances,” Rogovy shared. “Unlike necessities, dining out is optional,” he emphasized, “When consumers pull back from restaurants, it often signals they’re preparing for economic turbulence.”
Consider Jack Buffington’s perspective—the University of Denver professor observes that consumers may prefer purchasing a pack of beer to enjoy at home rather than indulging in a night out. Economic caution translates into modest choices.
To give you some context, bar and restaurant sales reported by the US Census Bureau fell by 1.5% from January to February this year. Though this doesn’t directly signal a recession, it’s a worrying trend that bears resemblance to the 11.5% drop in restaurant spending during the 2007-2009 financial crisis. Rogovy notes, “That 1.5% move in February is already a significant decline.”
Costco Sales
Grocery shopping at places like Costco offers another layer to our understanding. When households start buying cheaper meats or increase their home-cooked meals, it might signal broader economic concerns. It’s a subtle change but, as Gary Millerchip, Costco’s CFO, pointed out in December 2024, “We are seeing what we think is a little bit of a shift from food away from home to food at home.”
Swap an expensive beef cut for a more affordable chicken option—such is the consumer balancing act during times of financial stress. Post-earnings call insights revealed, “We continue to see a shift toward lower-cost proteins such as ground beef and poultry.” For many households, groceries rank high on budget lists, only beneath shelter and transportation. When times get tough, it’s one of the first areas where people tighten the belt, particularly impactful for those in lower-income brackets.
Traffic Levels
Think about traffic as an economic barometer. When economic uncertainty strikes, travel plans get postponed. You may choose to skip your summer getaway or limit local outings.
Reflecting this trend, airlines like Delta and United have adjusted revenue forecasts, citing reasons from decreased government travel to budgetary constraints. Even road traffic joins the fray, with fewer individuals choosing to commute or take leisure drives when economic conditions sour.
It seems straightforward, but the connection between decreased traffic and recessionary signals can’t be underestimated. As Zhang pointed out, hedge funds leverage satellite imagery to assess economic activity in varied ways—from tracking electricity consumption to traffic analysis. So, the next time you’re on the road, perhaps on a solitary drive to the store, take note of the traffic—or the lack thereof. It’s more than just cars; it’s a subtle read into our economic pulse.
With these unconventional indicators, maybe the question is: Are we merely passengers on the economic journey, or are we in the driver’s seat, more aware than ever of the road ahead?
Edited By Ali Musa
Axadle Times international–Monitoring
