Restaurant Demand Slows

Last week, we got two important data points: CPI inflation and retail sales. Both core and headline inflation came in under expectations, the latest indication that inflation is trending in the right direction. But there’s still more work to do to get inflation down to the Federal Reserve’s 2% target. Retail sales were weaker than expected in October, likely impacted by the restart of student loan payments on October 1. In taking a closer look at what’s happening with consumer services, we’re seeing a notable decline in demand in areas like restaurant spending. This softening is likely the combined impact of interest rate hikes, student loan payments restarting, and households running low on excess savings. Taken together, we’re seeing more pressure on consumer spending as we head into the holiday season.


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