One of the more idiosyncratic economic indicators is the Economist’s famed “Big Mac Index,” which uses the price of the popular McDonalds burger to measure purchasing-power parity in various countries.The Economist evidently isn’t the only news source to look to the golden arches as a sign of the economic times. This piece in the Wall Street Journal uses McDonalds, one of the select few companies with a true presence in nearly every country, as a unique vantage point from which to assess the state of the world economy, and they don’t much like what they see:
New McDonald’s CEO Don Thompson says consumer confidence has become a problem in most markets around the world, pressuring the company to “crank up” its focus on value, even though such a move weighs on margins.“We are seeing more markets that have consumer-confidence issues and at what we consider to be more-substantial levels,” he said during the company’s second-quarter earnings conference call.
Obviously, McDonalds is only one company, and it’s not staffed with flawless clairvoyant analysts. But on top of the slow jobs growth in America, slowdown in China, and near-total collapse in Europe, this may be just another sign that the next few months will be tough ones.When the world stops buying burgers, we’re in trouble.