Steak House Index Update 05/25/16

A week has passed since the last update.   Let’s see if we can get a table for 4 at Mastros Ocean Club, Newport Beach this coming Saturday.

As always, if you need a quick refresher, check out the original blog: https://terryliebman.wordpress.com/2016/03/02/move-over-big-mac-index-here-comes-the-steak-house-index/

Why you should care:  The US Department of Commerce ‘Bureau of Economic Analysis’ publishes the most recent GDP figures the instant they’re available.

Here’s the problem:  GDP numbers are reactive.  They only tell us what happened to the economy…months in the past.   Which means we can’t make financial/investment choices – personal or business – before the economy turns sour, only after.   Not good.   We want advance notice of an economic decline.   The SHI may help give you that.

Our objective with the SHI is to be predictive, to anticipate when the economy is going to ‘turn’ and give you the ability to take action early – not when changes are too late.

Taking action:  Just keep up with the weekly column.   If the index changes appreciably – either showing massive improvement or significant declines – indicating expanding economic strength or a potential recession, we’ll discuss possible actions at that time.  Trending is very important…and we’ll watch the trend.

THE BLOG:   Nope.   Mastros Ocean Club in Newport Beach is packed.   The first opening for a table for 4 is 9:30 pm.  Too late for me.  But we can still get a table any time we want at the Capital Grille!

Remember, you’re probably going to spend a minimum of $100 per person at each of these eateries.   And that’s with a mediocre wine.    While it’s clearly not as popular as Mastros Ocean Club, the same is true at the Capital Grille.  My point:  $400 to $600 (or more) for a Saturday dinner out is a lot of money.   For two weeks now Mastros has been solidly booked.   Impressive.   There is no economic weakness here.

Reviewing our SHI results since inception one trend does seem to be developing, however.  I don’t think 7:30 is the most popular Saturday dinner time.  I think 7:00 pm is more consistently popular.   And while, if true, this may create a bit of negative bias (downward pressure) on the numeric SHI reading, this does not affect the validity of the index.

Why?  As we’re maintaining a consistent methodology, week after week, the only impact is the SHI readings may consistently be 5 to 8 points lower than they should be.  The consistency of methodology is the most important aspect of this exercise.

Here are all the readings since inception.

Thanks for staying with us!   Until next week… !

• Terry Liebman