Signs of Recovery

These days, everyone is looking for some sign of recovery, indications that we may have turned the corner, or other signs of light at the end of the tunnel.

They’re looking in all sorts of different places — the stock market, housing, advertising, crystal balls, you name it.

Sure, you could follow the latest Gallup Poll data, or an assortment of economic indicators as your guide.  Or, you could track trends in the stock market for signs of sustained growth.  Prices on commodities such as copper, nickel and aluminum have also been mentioned as a barometer for recession and recovery.

And for a lot of people, those work just fine.

But I take a simpler approach:  Signs of recovery can be judged by the business at local restaurants.  How busy are they?  How full (or empty) are their parking lots on a given evening.  And most importantly, are they hiring?

The hiring question could ultimately serve as the single-best gauge.  Working through the entire scenario:  A restaurant will start hiring, either for their front-of-house (service) staff or their back-of-house (kitchen) staff when their business has picked up to the point that they can no longer effectively serve their existing customers.  That is the sign that their business has increased, which means that either 1) existing customers are spending more or 2) their number of customers / volume has increased.  Either way, it’s a sign that the purse-strings have loosened at the individual level.

How is this different than other indicators?  Mainly, it’s a sign of spending at the individual, not institutional level.  Stock markets, housing, and financial markets, among others provide a view of institutional spending.  Home and vehicle sales, for example, are still controlled by the lending institutions, and spending, or a lack of, is at their discretion.

Conversely, restaurant spending is controlled at the individual level, and is a sign that money has once again returned to you and your neighbors, who are confident enough to spend more freely.

This would, no doubt, be classified as a qualitative sign, rather than the more qualitative indicators, and may very well be an oversimplification.  But it’s also a matter of common sense.

And sometimes, a little common sense goes a long ways.