One of the surest signs of a strong economy is lots of people going out to eat. And that’s exactly what Americans are doing.
Sales at bars and restaurants in the U.S. jumped 2% in April after a similar increase in March, showing Americans still have a big appetite for dining out. Restaurant receipts are up 20% in the past year.
“Restaurants are thriving,” said senior economist Sal Guatieri of BMO Capital Markets.
Even rising prices due to high inflation hasn’t deterred would-be diners. The restaurant reservation site OpenTable said April was the busiest month on record.
Some of the increase in sales is not surprising, economists say. More people feel comfortable going out after a sharp decline in coronavirus cases and relaxed government restrictions. Warmer weather is also an incentive.
“Restaurants are benefiting from the return of patrons as Covid-19 risks continue to ease and the comfort level with returning to socially-oriented activities improves,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors
Yet the strong increase in sales in the past few months also is a sign consumers are still fairly confident in the economy even as they worry greatly about high inflation. When the economy turns sour, one of the first things Americans do is stop going out to eat as much.
That’s not what is happening. Encouraged by more people coming in to dine, restaurants have added an average of 70,000 new jobs a month through the first four months of 2022.
Employment still hasn’t returned to pre-pandemic levels — partly because labor is hard to find — but most restaurants are still looking to hire.
Can it last in light of soaring inflation? Economists predict spending on restaurants and other goods and services are likely to slow because of high prices. Rising U.S. interest rates could also slow the economy.
But an adage among economists is: Don’t bet against the American consumer.