Analysts, economists and market participants have talked about it Ask if the economy would slide into recession or avert a recession. The prediction has become all the more complicated as the labor market and consumer spending have remained resilient despite an environment of rising interest rates and inflation that remains high, much to the displeasure of the Federal Reserve.
A simple data point can help answer this million dollar question.
What happened: MC Donalds MCD CEO Chris Kempczinski shared an anecdote about the fast-food giant First Quarter Results Call Tuesday that underscored macro pressure.
“We’re seeing a slight drop in units per transaction. Things like has someone added fries to their order, how many items they buy per order, we’re seeing that going down slightly in most of our markets around the world, but it’s still going down,” the manager said.
Kempczinski also noted that there has been opposition to the pricing in some places.
“So I think all of this again reflects a more challenging macro environment,” he said.
McDonald’s saw a slowdown in shipment growth, the executive said. This is another sign of an imminent downturn as customers avoid any price inflation because of the service.
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Why it matters: When people start cutting back on spending due to economic uncertainty, they usually opt for cheaper fast food options like burgers and fries. Cutting back on that order or opting for dine-ins instead of extra-cost deliveries could portend a worse situation.
The National Bureau of Economic Research defines a recession as two consecutive quarters of negative GDP growth. Final GDP growth for the fourth quarter, released at the end of March, showed that the US economy grew 2.6% year-on-year, after 3.2% in the third quarter.
Source: Office of Economic Analysis
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