In your article, you mention "Retail sales fell in February, including spending at restaurants and bars, according to the U.S. Department of Commerce."

I have worked in the bar business for 13 years. I've seen declines in sales due to several things in the past (e.g. poor management, fickle crowds, bad customer service, etc.), but never have I seen people augment their drinking due to the economy. It's almost been an insulated business. People want to go out and they want to drink. They find ways to pay for it.

However, since the end of the summer, I've noticed a sharp decline in sheer bodies (not just sales). There aren't as many people out anymore, in any of the established city "bar areas" (Federal Hill, Fells, Power Plant, Canton). That decline has gotten much worse since January and continues to fall.

Before you see multitudes of people mulling around any of the aforementioned areas pretty much from happy until 2 a.m. on any Friday or Saturday. Now, you're seeing those hours shrink. People are either going out later and pregaming, or getting as much drinking in during the happy hour specials as they can and going home early. You're seeing bars weeded from 6 - 9:30, then slow 9:30 - 1100, then busy again. You're also seeing many people who used to go out Friday and Saturday only going out one of those two days.

Observationally, I would tell people that this was a result of the declining economy, but your article gave hard evidence to that. People still want and will get their booze, but the economy is changing the way they drink.

Interesting observations, and sorry if I was misleading. This wasn't my article. It was written by Hanah Cho and Jamie Smith Hopkins. EL

That article was rather sloppily written (or something got garbled in editing).

For instance, after this:

"For the two of us to eat out at Ruby Tuesday's and Red Lobster, it's about $30 to $40 dollars. If we go to Cactus Willies, it's only $25.

came this:

Even national chains and high-end establishments are not immune to such bleak news.

Are the authors not aware that Ruby Tuesday and Red Lobster are national chains?

And this:

authentic gourmet Mexican dishes, including menudo and chicken flautas

Menudo is gourmet? Since when? Exotic to Americans, perhaps, but not gourmet in Mexico.

Despite the gaffes, the article was interesting reading.

I think Trouble is right about restaurants and bars, but I think they still took LESS of a hit than stores on a whole. The malls seem to be definitely less packed, but I still see the restaurants at the malls pretty crowded. Like Trouble said though they are probably packed at peak times and then clear out after 8-9pm. People still seem to be going out though. I guess in times like this people still want to eat and drink, but cut back on other types of spending.

That article looks exactly like an expanded version of your Kiko's post. Exactly! I can't believe it took two people to write that piece of crap. If I go into how bad the logic and statistics are I will lose my mind. Two points: Kiko's business fell off starting in 2006. Duh. Restaurant traffic INCREASED 1 percent natonally in 2007. You need real statistics for this area if you are going to use anecdotal support from local restaurants. Just a big pile of guano.

Okay, now I'm really pissed, because I'm constructing my own data from real statistics. I will post the results when I'm done. Tease ... retail sales were actually up 2.6% from the previous year.

I knew it. I knew it. A story I really wanted to write when I was writing a lot of health and fitness stories but never could get anyone interested in was how to judge studies' data. So many of them, even in the prestigious journals, are looking at 36 people and are funded by the company that produces what they're studying. Also the whole cause and effect thing. (I realize this is a bit off-topic, but the longer I'm in this business the more I realize you can find statistics to support any position.) EL

Everything has gotten more expensive. I think more people are staying home or close to home to save gas, etc. I still encounter plenty of crowds eating out, but then I probably go out when the crowds are at their heaviest. I can't hang out late any more--getting up at 5:15 five days a week keeps one home earlier too. (It's not because I'm getting older is it??) The whole economy is scary to me and getting scarier.Maybe I need to start drinking not to pay attention.... (just kidding). On that note, never saw a bar or liquor store having a going out of business sale.

You know what helps? Never reading or watching the news. It works for me. (Of course, I want you to keep reading the features sections and the blog.) EL

While Hal is exercising pedantry, let me chime in. How did "$40 dollars" get past the copy editor? One should use the "$" sign or the word "dollars", but not both, when referring to the same number. I can forgive bad usage or typos (my own included) on this blog, but the stuff that goes onto newsprint ought to be better.

Okay, I just free-based a box of marshmallow peeps and I'm ready to go -- let's have fun with statstics!

So retail sales were down in February compared to January. First let's not be as lazy as the Sun reporters and let's go to the primary source of the government data and drill down for restaurant data (officially called Food Services & Drinking Places).
http://www.census.gov/svsd/advretl/view/advt2.txt

Restaurants have normal seasonal fluctuations from -9% to +6% (weather, how holidays fall, etc.) February is the worst month for restaurants for those reasons, plus one other one: It's ALWAYS going to have fewer selling days than January.

All other things being equal, Feb2008 sales should be down 6.5% from Jan2008 (31 vs 29 days).

I'm going to use the real numbers, not the massaged ones the Sun article used. Business owners don't run their sales data through an X-12 ARIMA program to compare this month to last month. Compared to Jan08, Feb08 retails sales were actually up 0.2% and restaurant sales up 1.7%, when you would expect a 6.5% drop because of fewer days. Hmmm... But yes, stores were doing worse than restaurants. So the article has it all wrong maybe. In this particular economic moment, I might rather own a restaurant than a tire store.

A better way to view a given month is to compare it to the previous year. Jan08
restaurant sales were up 5.4% over Jan07. Feb08 sales were up 8.9% over
Feb07 (not adjusted for inflation).

That tells you what people are spending, but not where. Some of the inflation of goods mentioned in the Sun article is bogus. Some were temporary; they just mentioned a temporary high. Also, when some items get very expensive, they don't go on the menu for a while.

There are a lot of complex trends involved in all of this that can't be sorted out easily, but there are some real data. I think the article assumes that things are bad and then tries to prop up that assumption with faulty statistics and useless anecdotal evidence. Don't forget, restaurant owners are always complaining about something, real or imagined. I don't have any good local numbers, so you just never know.

Grrr, I had to get some inflation data. From the CPI-U
http://www.bls.gov/news.release/cpi.t01.htm

Feb07 - Feb08
CPI Total 4.0%
Food & beverages 4.5%
Food at home 5.1%
Cereals and bakery products 6.6%
Dairy products 13.3%
Fruits and vegetables 1.3% (you don't hear about that)
Food away from home 3.9%
Alcoholic beverages 3.7%

Oh I am so clever today. So if you were to have perfect information, you would
know that eating out is relatively less inflated this year than eating at home. Ta da!

Well, that makes some sense, since restaurants buy in bulk at lower prices and can shift ingredients to cheaper inputs. Dairy is way up, but the whole bread panic doesn't seem to be supported by the data.

To summarize: as of February it was 3.9% more expensive to eat and drink out than a year ago, but restaurants and bars took in 8.9% more than last February. That 8.9% increase should more than cover the inflation of their inputs. Clearly they raised their prices as the price of their ingredients went up, possibly more than needed.

That sounds like a fairly awesome situation to be in. Another problem with the Sun article is that it is a self-fulfilling prophesy. Doom is everywhere! Be afraid. Stay inside. Those are the basic statistics, come to your own conclusions.

Higher sales and 1% more restaurant traffic. People are NOT staying at home. It's not just bad writing and research, it's potentially damaging to businesses.

Oh, Elizabeth--you're NOT a news junkie like me? Oh dear ...

Who said something about "lies, damn lies, and statistics"?

From the Sun article:
Amid gloomy economic trends - falling real estate values, layoffs and stock market volatility - many consumers are changing their spending habits.

Wow, things sound terrible. Let's challenge each of these assumptions:
1) So inflated real estate values were good? Lower housing costs are good for renters and buyers. If you own your house, then a theoretical drop in price doesn't affect your disposable income at all, except maybe in lower property taxes.
2) Stock market volatility is not a bad thing; when prices change that's how you make money. Ever heard of selling short?
3) The most egregious and fear-inspiring crap of all: MASSIVE LAYOFFS! Time to do some really, really basic research that we expect you to do for us, before writing something.

Baltimore-Towson statistcal area
Unemployment rate
Jan03 5.2%
Jan04 5.1%
Jan05 5.0%
Jan06 4.3%
Jan07 4.5%
Jan08 4.0%

Maryland Unemployment Rate
Jan03 4.3%
Jan04 4.3%
Jan05 4.2%
Jan06 3.8%
Jan07 3.6%
Jan08 3.5%

Total U.S. unemployment rates: Dec07=5.0, Jan07=4.9, Feb07=4.8.
http://www.bls.gov/data/home.htm

Massive layoffs? Don't you have any standards or do any fact checking? GIGO: Garbage in, garbage out.

I knew you'd come through for us. EL

PEOPLE, WE ARE IN A TEXT BOOK RECESSION. WHAT IS THERE TO FIGURE OUT??????

I don't know what text book you're reading.

A recession is defined as two or more consecutive quarters of negative GDP growth. Fourth quarter 2007 growth was 0.6%. Not negative.
http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

First quarter 2008 hasn't happened yet. The earliest that a recession could be defined would be in July.

GET A NEW TEXTBOOK!!! CAPITALIZATION DOESN'T MAKE SOMETHING TRUE!!!!!!!

Of course, you could be making all this stuff up. EL

Has anybody considered that the restaurant industry might be doing okay, but some small places might be getting squeezed by more competetive chains in the burbs? I wonder what the statistics are on how many new places open up and what the total seating capacity is. I doubt they have stats on that. I know that in Little Italy it seems like there have never been more restaurants and yet they almost all seem to stay in business. Now go be a good obsessive owl and gather up some more statty nuggets for us to chew on Meaty one.

I gave you my sources, which anyone can check. In statistics you don' t NEED to make anything up. You can usually find what suits your purposes. In my case - THE TRUTH!

Whether or not the Sun article accurately captured the probelm now, the crux of the problem is that costs -- especially for gasoline, electricity, food, home heating oil -- are outstripping growth in wages. With home prices falling, people can no longer use their home equity as a source of money. So the question is, will they run up more debt on credit cards to maintain their liefstyle or will they cut back on spending -- and if so, where and when? Also, will businesses eat their own higher costs or pass those costs onto their customers? But there's little question that the consumer is feeling the pinch.

Everyone take a deeeep, cleansing breath and check out the winner of the Peeps Diarama Contest at www.washingtonpost.com/source. The winner was The Tomb of King Peepankhamun. Runners up Elvis Peepley, Nightmare in Pink, etc.

And I will have another Peeps Treat for you tomorrow. EL

This is interesting and unreported by the crack Sun reporters:
Wholesale Food Prices Declined 0.3 Percent in February; First Decline in Three Months
Wholesale food prices declined for the first time in three months, according to preliminary figures from the Bureau of Labor Statistics. Wholesale food prices edged down 0.3 percent in February, after posting strong 2.1 percent and 1.6 percent gains in December and January, respectively...
http://www.restaurant.org/trendmapper/index.cfm

Spending up, menu prices up, wholesale costs down. Sounds like the opposite of bad to me.

CAPITALIZATION DOESN'T MAKE SOMETHING TRUE!!!!!!!

What?!!! Next you'll be telling me that speaking English in a Really Loud Voice doesn't make it understandable to non-English speakers!

Really Loud Voice American is a classic.

Hey, I don't know what is going to happen to the economy, but now you can formulate your own opinions, just like a real economist. I was surprised to find that unemployment had been going down in Maryland over the last five years. Who knew? Hey, it's all about energy costs, which ripple through every sector of the economy eventually. And that's oly going to get worse. The world is doomed, so go out and enjoy some good food and drink tonight.

What will happen when you run out of g words? Will you stop blogging? EL

I was surprised to find that unemployment had been going down in Maryland over the last five years. Who knew?

Aren't the unemployment figures skewed by people who have given up looking for jobs? I don't know the answer, I'm just asking the question.

The logic equivalent of Really Loud Voice or USING ALL CAPS is Proof By Vigorous Assertion. PbVA has been a staple on the internet for a long, long time.

Sometimes that is true Hal, but to be honest I don't really care to know in this case as I'm burned out on the topic. That usually happens after a prolonged period of high unemployment, which wouldn't be the case here. I think we can safely say that things in Maryland are a little better on that front. And unemployment has been lower in Maryland than the national average for decades. That sounds good. Batter Blaster!

What is PBVA?

What is PBVA?

Proof By Vigorous Assertion.

Just want to say thanks to OMG to doing a lot of statsy reading and hard work for the rest of us.

Seriously - I appreciate it.

Me too. I knew you'd come through when called upon. EL

Thank you. It was painful, when I would rather be out hunting baby vegetables.

It's good to know that OMG is really and truely home.

I can not believe that I'm going to get into a debate about the economy in a restaurant blog comment board; however, to state "Higher sales and 1% more restaurant traffic. People are NOT staying at home. It's not just bad writing and research, it's potentially damaging to businesses" is in accurate. Plain and simple, people ARE (capitalization for full, intended, vigorously asserted effect) staying home more than they were, especially in the last 12 months.

You can examine statistics all you want, developing your own formulas for the equation that that proves what you want to assert, but if you would like a different opinion, check out the following link: http://www.restaurant.org/pdfs/research/index/200801.pdf

This is a link to the National Restaurant Association's Restaurant Performance Index for the last 5.5 years (approximately). To read the graph, 100 is the baseline. Anything rising above 100 is considered growth. Anything dropping below 100 is considered contraction.

Look what has happened since July 2002, and then look at what has happened since Feb/March 2005. What we see is a spike about Feb/March 2004, then nothing but decline.

Nothing would be considered a contraction until we reach the about October/November 2007, but that is exactly what we see after that, a contraction.

Also, "The Current Situation Index, which measures current trends in four industry indicators (same-store sales, traffic, labor and capital expenditures), stood at 97.9 in January – down 0.2 percent from December and its third consecutive monthly decline." 97.9 in January indicates that we are still in contraction.

"Although the Expectations Index registered a moderate gain in January, it remained below 100 for the third consecutive month. The Expectations Index, which measures restaurant operators’ six-month outlook for four industry indicators (same-store sales, employees, capital expenditures and business conditions), stood at 99.7 in January – up 0.5 percent from its December level." Here, we see a slight incline in the expectation, but what see is contraction remaining.

The long and short of it is that
1. "January marked the fifth consecutive month below 100, which signifies contraction in the current situation indicators." --To think that we are so far from a recession (oh that dirty, dirty word) is ridiculous. Of course, this is only one industry, but it is a massive industry, one that many believe is indicative of what will happen for the future.
2. "Operators reported negative same-store sales for the third consecutive month in January."
3. "Restaurant operators also continued to report negative customer traffic levels in January – the fifth consecutive month of declines. Twenty-seven percent of restaurant operators reported an increase in customer traffic between January 2007 and January 2008, up from 25 percent who reported similarly in December. Fifty-four percent of operators reported a traffic decline in January, up slightly from 53 percent who reported similarly in December."
4. Although the Expectations Index registered a moderate gain in January, it remained below 100 for the third consecutive month.

Now to tackle the unemployment debate: Plain and simple, the unemployment rate is deceiving. Economic scholars on both sides agree to that:

1. You are not considered unemployed if you are not actively seeking work. As the employment opportunities decline, people find themselves

a. forced in to retirement, not seeking active employment
b. frustrated by the economic situation and falling on social programs, not
seeking active employment.

2. You are not considered unemployed if you have any job what so ever:

a. People who are laid off find themselves in situations where they need to get work and get it quickly. Usually, these jobs are lower-paying because the employee needs to get money now. Beggars can't be choosers. You are not considered unemployed if you have any job what so ever. Assume you were making $50,000 as a worker at Delta (just announced cutting 3.6% of workforce). You have to earn some money, so you take a job working as a construction worker making $36,000. Yes, you are employed so you're not being counted in the unemployment numbers, but are you making the money you once did? Are you able to afford your bills? For the purposes of this blog, are you able to afford entertainment expenses (e.g. going out to eat or to have a few beers at happy hour)?

b. People are laid off and can have to take a few part-time jobs. In the same example, assume our former Delta worker took the construction job for $36k. He discovers this isn't enough to thrive on, so he takes a part-time job at Royal Farms, earning $14k. Now, he is earning his $50k that allows him to afford his lifestyle, but now, he can't live it because instead of working 40 hours a week, he is working 70. He, now, can't afford the time to go out to eat or have a few beers at happy hour.

My bottom line: The market and the economy are based on confidence. Right now our nation, our state, our community are not confident.

I'm surprised no one mentioned a more relevant, and better reported story, inside the Sunday paper's A section by the Associated Press about the effect of higher diesel prices on truckers -- costs that are beginning to show up throughout the economy.

Here's the link. EL

Economics is the only field in which two people can get a Nobel Prize for saying exactly the opposite thing.

Oh I almost forgot, Proof by Vigorous Assertion (PbVA) is a logical fallacy.

Essentially, the asserter appears to have so much conviction in the assertion that he/she may begin to appear to be credible, which is the goal. Essentially, I believe so much in XYZ that you should too.

The problem here is that the assertion is supported by the audience's belief in the conviction of the asserter. For a truly logical argument, the assertion would be supported by facts.

As I said, you can spin these any way you want. Kudos on introducing confidence-based psycholgical leading indicators formulated by a lobbying group. I was going for more reality-based current data from a non-biased source.

In your world a restauranteur can be making more money than last month, but he is in crisis if he didn't anticipate that increase. Too much psychological mumbo jumbo and whored up stats for me. I would rather peak at real data and interpet it than look for massaged data that fits my theory and assumptions. Your unemployment discussion is totally off point, there are minors truths in it, but it's just not relevant.

You know why 7-11's have height markers on their doors? So that the clerks can accurately judge the height of a robber. Without those people consistently overestimate the height, because people see what they want to see (big scary man with gun). That's why real measurement is better than psychological samplng.

Your data is compelling. It would be exactly what I would put together if I were lobbying the government on behalf of the industry that paid me to do it. But since you can't see what the raw data is or the methods used to collect and manipulate it, it's garbage to me.

The economy is based on confidence? Maybe in an Albanian Ponzi scheme. You lead with your assumptions, which if people are gullible enough can be a self-fulfilling prophesy. Good day, sir.

OMG with ruffled feathers. Not an opponent I want to face.

All this talk of statistics reminds me of a book that we have at home: A Mathematician Reads the Newspaper. Basically, it's all about how statistics are misused to support whatever point the newswriter is trying to make.

I agree with Trouble on PbVA. Hitler was good at it and that guy on TV who sells the Super Shammy and Rachel Ray. Since I have no convictions whatsoever, I will let the data tell the story.

What I want to know is why would anybody EVER open a restaurant in the first place? It seems like there are many more restaurants opening in Baltimore City than closing in this Time of Dread. Are restauranteurs just masochists and fools?

Whoa, it seems like people like to show off their Ph.D. in Economics. Bottom line is if you would if you are hungry, then eat. If you have money to eat out, after everything else is paid for, then by all means do so. If not, then their's always a can of SPAM!!!

So I heard that Sullivan's, a steakhouse, is opening in the Verizon building on Pratt and Light, where Legal Seafoods was suppose to move before it closed.

Well, I did goad him into telling us what he thought, so blame me. And thanks for the Sullivan's tip. EL

Economics truly is dismal. I'd rather be hunting lunch.

Following up on Trouble, OMG may want to check out the weekly claims for unemployment on the Maryland DLLR website. Six to nine thousand more people per week are filing for unemployment than last year. Payouts are $12 million/week ($2-3 million more than last year).

OMG said: I'd rather be hunting lunch.

Hasenpfeffer!

I think I read this in the Baltimore Business Journal regarding Sullivan's. Here's the link:http://baltimore.bizjournals.com/baltimore/stories/2008/03/24/story11.html

Many thanks. EL

Thanks Susan BK but the site you sent me to seems to say the opposite.

http://www.dllr.state.md.us/lmi/mlr/lausaug98.htm

MD employment:
Jan07 = 2,870,738
Jan08 = 2,885,411

MD unemployment
Jan07 = 107,305
Jan08 = 104,747

I don't undersand the confusion. More people working, less people not working. I can't find your data. Why don't you post the exact URL? Thanks. Oh look it's Happy Hour, maybe I'll head down to the tavern for a pink squirrel.

Okay, I'm not an economist, but it seems to me that Maryland is faring better in the current economy than other parts of the country, at least that is what I hear from my West Coast relatives. It's hard not to feel poor when you are paying more than $4 a gallon for gas and live from gig to gig.

The fundamentals of the Maryland economy are too strong to have a serious recession. We are not going to see double digit unemployment on the scale of a Detroit.

Now, we can certainly, however, have a slumping economy, and that slump will show up in ways outside of employment numbers.

First, the Maryland economy is highly dependent on federal spending. Eventually, government spending will be slowed. The current rate of defense, homeland security and entitlement spending can not continue forever. When it slows, Maryland will slow.

The second slowdown is a cut back in consumer spending. As home prices fall, people feel less wealthy. They are less likely to take out home equity loans, which was a huge factor in sustaining the consumer spending of the past five years.

As RoCK has said this is a blessed place to live. Our weather and economy is blissfully stable. We can thank God or our righteous demographics - you decide. I think it's just good fortune and a little divine persuation. Hurricanes be gone!!!

well said Rev

Wow. There's a lot of smart people talking here. My head hurts.

I think I'm just going to go out and eat some CORN!!!!

Very well put RoCK. Jay C, I was reading something about ethanol and you were right about it. The government is paying farmers to plant corn instead of wheat and then tuirn it into ethanol. It's a total scam. Corn=Iowa=Politics.