Are We Seeing Signs the Recession May be Waning?

If you peer through the haze of gloom and doom, you may just glimpse several encouraging economic developments. Could it be that we are seeing indications that the recession may be waning? Let’s look at 6 positive signs.

Index of Restaurant Activity up for the 3rd straight month. The National Restaurant Association’s comprehensive index of restaurant activity has risen for three straight months starting in January ‘09. In addition, the Expectations Index, the Association’s survey of restaurant owner’s expectations, rose for the fourth straight month. Also, 44% of restaurant operators plan to make capital expenditures in the next 6 months, the highest level since July ‘08. (Restaurant News Resource, Apr ‘09)

Americans’ leisure travel intentions trend upwards. According to a February TravelHorizon’s survey, the U.S. Traveler Sentiment Index rose in February ‘09 from the last survey taken in October ‘08, indicating an increase in Americans’ willingness to travel for leisure purposes. (Restaurant News Resource, Apr ‘09).

Macroeconomic uncertainty is subsiding. In their paper on economic uncertainty, two Stanford University Economists, propose uncertainty shocks as one of the primary impulses that drives business cycles. They argue that uncertainty causes corporate delay and deferment and as uncertainty subsides, businesses reengage.

Three months ago, these economists may have joined others in predicting a long and painful recession, but now they predict “that the worst has been avoided.” They further claim that economic uncertainty is dropping so rapidly that they believe growth will resume by Mid 2009. (Bloom and Floetotto, The Recession will be over Sooner than You Think, Jan ‘09)

Credit markets appear to be loosening. Dr. Prieur du Plessis, an investment professional with 26+ years experience, concludes that “the credit market tide seems to be turning.” His in-depth look at worldwide credit indicators points to significant warming conditions since the “big chill” last October. (Prieur du Plessis, Credit Crisis Watch: Some Positive Developments, Feb ‘09)

Global commerce indictors on the rise. The Baltic shipping indices are coming to life again. The Baltic Dry Index, a closely watched shipping index and high level indicator of global trends and associated strengths, has almost doubled from its December low. (Mark Perry, Baltic Dry Index, A Leading Economic Indicator, Feb ‘09)

Consumer spending may be ready to thaw. Consumer confidence has surprisingly rebounded. The US, being an economy largely driven by consumer spending, will benefit greatly from an uptick in consumer spending and the resulting rise in retail sales. (CNNMoney.com, Consumer Sentiment in Surprising Rebound, Jan ‘09).

If you are one of the restaurant operators thinking about making capital expenditures and looking for a restaurant loan, try Advance Restaurant Finance, LLC (ARF). ARF has been making short term business loans to restaurants for almost a decade. While the credit markets still may need to loosen, ARF never stopped loaning money to restaurants. If you are looking for a restaurant business loan, ARF is one of the first calls you should make.