Steak Wednesday

Let’s waste no time and sink our teeth into this weeks SHI – we have an interesting development.

First, a quick refresher:  This is a weekly continuation of the original BLOG from about two months ago.   If you’re a new reader, check this out first:  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:  Here’s a chart showing the SHI values from the start of our exercise.  For easier understanding, I’ve used a ‘conditional formatting’ option in excel – green showing the highest value; red, the lowest:

Do you see the trend?   Remember, SHI readings can span from a high of 72 to a low of -44 – and a reading of -23 is, well, troubling.   The trend is equally concerning.    Why?

Well, let’s compare the ‘booked’ reservations on 3/9 vs those earlier today.  Take a look:

Wow.  Today, there are a whole LOT of tables available – even at Mastros!  Unlike 7 weeks ago when even the Capital Grille had unavailable time slots.   Hmmm……

Remember:  We’re attempting to predict an economic slowdown.  The SHI theorizes that ‘elective’ consumer spending, for ‘high-dollar’ products or activities, will be the first to hit the skids when the economy slows.

Have we hit the skids?   I think we’re a bit early to reach that conclusion.  Let’s chew on this a bit longer.  But the trend is certainly unappetizing.

• Terry Liebman