Personal income and hourly earnings
Average hourly earnings data are collected and reported monthly by the U.S. Bureau of Labor Statistics. Personal income data are reported monthly by the U.S. Bureau of Economic Analysis.
Hourly earnings remain unchanged
Average hourly earnings of production and nonsupervisory employees remained unchanged at $20.70 in November. Personal income increased 0.3% month-over-month in November. In the above chart, we can see that personal income took a hit from January 2009 to September 2010. This was an effect of the recession. Personal income has risen ever since.
Takeaway for the restaurant industry
As average hourly earnings and personal income increase, consumers increase their spending. This includes spending on discretionary items, which is beneficial to the ETF Consumer Discretionary Select Sector SPDR (XLY) and restaurant stocks such as McDonald’s (MCD), Chipotle Mexican Grill (CMG), Panera Bread (PNRA), and Yum! Brands (YUM).
During these rising times, restaurants may consider increasing their advertising spending and run promotional campaigns. This helps restaurants capture on higher spending sentiment and increase the share of the wallet. This increases the total amount spent by a customer at restaurants. Some strategies include increased offerings during various dayparts such as breakfast or late nights. Taco Bell under the umbrella of Yum! Brands (YUM) is currently using this strategy.
When we speak about rising hourly earnings and personal income, we must also understand how personal savings and disposable income are affected. Let’s look at this next.