Bloomberg reported the closure of a number of restaurants in the United States amid inflation

The US restaurant business is suffering from inflation and falling consumer demand. In an attempt to compensate for the pressure, large American companies are cutting staff and reducing the number of restaurants, but small businesses do not have this option, Bloomberg reported on November 7.

"Realizing that their customers are not ready for higher prices, restaurant chains are forced to disappoint their investors, sacrifice profits to maintain market share and put up with the subsequent drop in stocks. Consumers are happy to keep prices on menus and seasonal offers, but companies inevitably have to compensate for lost profits by closing restaurants and cutting staff. Eventually, when the situation permits, they will raise prices anyway," warned columnist Conor Sen.

As an example, Bloomberg cites the policies of major restaurant chains such as Chipotle and Starbucks. In an attempt to attract customers, large restaurant chains are forced to maintain prices at the expense of their own profits, which inevitably leads to a drop in their shares. For example, the S&P Composite 1500 restaurant index has already fallen below the April low, when investors' concerns about duties were at their peak.

An alarming sign for the U.S. economy is falling demand from young people and middle-income consumers. Now it's not just the poor who refuse to go to a cafe in favor of having dinner at home.

A similar situation is observed in other consumer-oriented industries. They are suffering from rising prices, including as a result of US President Donald Trump's trade policy, whose duties raise production costs for businesses and act as a "consumption tax" for the population.

"The Trump administration, perhaps by looking at the pricing strategies of [restaurants] Chipotle and Starbucks may be pleased that the duties allegedly do not affect consumers with strong inflation, as some economists feared. But if their motivation is the lack of income for consumers that allows them to pay higher prices, then the economic consequences [of their policy] are very real," the expert warns.

Painful split: Democrats put pressure on Trump over the shutdown

Due to daily GDP losses of $15 billion, Republicans may compromise.

Kevin Hassett, head of the White House National Economic Council, said earlier on November 7 that the suspension of the US federal government could lead to long-term negative consequences and was already causing more damage to the economy than expected.

NBS News reported on November 5 that the shutdown, which began at midnight on October 1, became the longest in U.S. history, surpassing all previous shutdowns.

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