IS OPTIMISM READY TO RETURN? CHECK OUT THE RESTAURANTS
Although surveys indicate that consumers are growing gloomier, economist Gregory Gieber of Smith Barney, Harris Upham & Co. points to one indicator that suggests that confidence is bottoming out: retail sales of drinking and eating establishments. "Dining out," he says, "is the most highly discretionary action of all consumer purchases and the one that is most easily and quickly adjusted when people become concerned about economic security."
After rising at about a 3.2% annual rate from 1982 through 1988, he notes, real drinking and eating retail sales suddenly leveled off in 1989 and moved sideways through 1991. Then, after a brief rise early this year, they "fell through the floor, declining by 7% between February and July."
The good news is that in the past two months, this spending drop has leveled off, suggesting that consumers have at least stopped curtailing such expenditures. One development that has helped, adds Gieber, is more reasonable menu prices, which have risen a scant 1.7% in the past 12 months.GENE KORETZ