In 2008's fourth quarter, consumer spending on food fell at an inflation-adjusted 3.7% from the third quarter, according to data from the Commerce Department's Bureau of Economic Analysis. That is the steepest decline in the 62 years the government has compiled the figure. The report is based on receipts from a sampling of food-oriented businesses across the country.
The big drop likely comes from two things, said Joseph Carson, an economist at AllianceBernstein who worked at the Commerce Department in the 1970s. First, consumers have been trading down to lower-priced items.
With comp-store sales and profits declining, P.F. Chang's China Bistro is reducing its planned openings for 2009 to focus on improving its existing units, executives said at the company’s fourth quarter conference call.
The U.S. economy turned in its worst performance in a quarter-century in the closing months of 2008, and risks are growing that the current months could be even worse.
Gross domestic product, a gauge of the nation's output, fell at a 3.8% annual rate in the fourth quarter, adjusted for inflation, from the previous quarter. The decline was the largest since 1982, though still well below the postwar record 10.4% quarterly drop seen in 1958.