Market Minute: October 10th, 2025 - Reading the Signs of Consumer Spending
As an analyst at heart, I collect information anywhere I can find it. A member of my golf club owns a cardboard box manufacturing company, and I regularly ask him about his backlog of pending orders. Another member is in the scrap metal business, and I quiz him on sales and demand. A third friend is an electrical contractor focused on commercial and industrial customers, and I check in with him on his book of future projects. All of these data points make up the mosaic of the economy and help inform my thinking.
Beyond being a subscriber to The Wall Street Journal, I also receive their morning email, “Markets A.M.,” which typically provides some interesting data points. In an article published this past Tuesday (10/7/25) by Kinjoo Lee, titled “Back to the Kitchen,” she writes that Americans are cooking at home more often. Pre-COVID, about 83% of meals were eaten at home. That number shot up to 87% in 2020 and 2021 but has only settled back to 86% of meals sourced from home.
A significant part of this trend is tied to inflation. In 2019, it was 3.7 times as expensive to eat out versus dining in, and that figure has since risen to 4.3 times, according to Sally Lyons Watt, global consumer packaged goods and foodservice industry advisor at Circana. Further, according to the article, restaurant prices in August were 8.6% higher than they were two years ago, while grocery bills have increased 3.6% over the same period.
One can certainly extrapolate that eating in will benefit grocery stores and food suppliers, but that reduction in consumer spending is ultimately a net negative for the economy, in our opinion. Why? Consumer spending represents about 70% of economic output. One could argue that people are substituting home cooking for dining out to free up spending for other things. We’re taking that idea a step further — people are increasingly concerned about inflation and spending, and therefore choosing to dine out less often. Following the logic of behavioral finance, if consumers are cutting back on restaurant spending, they may also be looking for other ways to reduce expenses because they feel the effects of inflation everywhere they look.
While we certainly don’t believe one data point makes a trend, consumer behavior cannot be ignored. By the way, my friend with the box company says orders are a little slower than last year, my scrap metal friend describes business as “okay,” and the electrical contractor told me he’s seeing projects getting delayed. More to come, but all of this is prompting us to take a closer look at inflation’s impact on consumer spending and, in turn, the broader economy.
