Decreasing restaurant spending suggests the American consumer is weakening

While there are a multitude of metrics to choose from when ascertaining how the American consumer public is faring, one key number to look at is the total amount of money spent on restaurant dining. Many economists believe that consumer flexibility is tied to the public's willingness to dine out, and historically this trend has aligned with performance in the broader service-based economy. 

A report published on March 20 by Knapp-Track, a U.S. market analytics group, showed a 5.4 percent reduction in sales at American restaurant chains. Officials from the company told Bloomberg News that "February was pretty ugly," and pinned the origin of the downward trend on the 2 percent payroll tax hike instituted at the beginning of this year. 

Additionally, the February fall in sales continued a trend started last year, when consumer spending at so-called casual dining restaurants slid in December and January by 1.6 percent and 0.6 percent, respectively. This development represented the first consecutive period of reductions since 2010.

Other financial concerns, including health insurance costs and surging gasoline prices, are straining consumers even further. Knapp-Track specifically cited a week between January and February when gas costs climbed 17 cents.

"That one-week spike was a killer; it destroyed sales in the first week of February," the agency reported.

While these developments don't conclusively prove that the U.S. consumer is down and out at the start of the year, they suggest that the flexibility of Americans to spend is slowly weakening. Investors might want to consider realigning their portfolios to move away from exposure to retail-related liabilities and instead focus on income-generating assets like cash flow real estate. To learn more, visit today.