in july analyst paul westra of the brokerage firm stifel nicolaus warned of a looming <u+201c>restaurant recession,<u+201d> noting that it might be the first sign of a more widespread u.s. recession in 2017. he said this in a bearish report that downgraded 11 restaurant stocks. the facts on the ground support his gloomy forecast. restaurant traffic has declined 2.8% from the start of the year through september, according to the restaurant industry snapshot , a survey of some 25,000 restaurants by research firm tdn2k. at this pace, the firm said, <u+201c>2016 would be the weakest annual performance since 2009, when the industry was recovering from the recession.<u+201d> these declines have consequences. in the past 10 months, eight major restaurant companies, representing at least 12 chains, including cosi, logan<u+2019>s roadhouse, old country buffet and zio<u+2019>s italian kitchen, have filed for bankruptcy. what<u+2019>s causing this drop in restaurant traffic? in many respects the decline is counterintuitive. gas prices are down, which normally increases discretionary spending and boosts restaurant visits. food costs are down at grocery stores, which gives them a competitive advantage over restaurants but should also mean consumers have more money to dine out. that hasn<u+2019>t happened. a september survey by the research firm civic science found that more americans are spending less on dining out. the no. 1 reason was, not surprisingly, a worsening of their personal finances. yet the one factor that <u+201c>jumped off the screen<u+201d> was increased health-care costs. according to the survey of regular quick-service diners who had increased health-insurance costs over the past year, 47% cut back on restaurant spending. that<u+2019>s very close to the 45% of consumers who are eating at restaurants less than they would prefer, according to an april survey by the national restaurant association. the civic science survey also found that consumers whose health-insurance costs had increased over the past year were 30% more likely to say they were <u+201c>significantly<u+201d> cutting back on restaurant spending than those whose insurance costs had not increased. one doesn<u+2019>t need to be an economist to see that obamacare is reducing consumer spending, resulting in a reduction in restaurant visits. combined with the economic advantages of eating at home due to lower grocery-store prices, we are experiencing what you might call a government-mandated restaurant recession. next year will likely be worse. the average cost of benchmark premiums on the obamacare federal exchange rose 2% in 2015 and 7% this year. but last week the obama administration confirmed the average cost will increase by another 25% in 2017. premiums in some states are expected to increase by as much as 50%. deductibles in some cases have doubled<u+2014>or even tripled<u+2014>to thousands of dollars a year. minnesota gov. mark dayton, a democrat, recently acknowledged what many americans have known for some time: <u+201c>the affordable care act is no longer affordable to increasing numbers of people.<u+201d> bill clinton went further, calling it <u+201c>the craziest thing in the world<u+201d> that under obamacare some hardworking americans <u+201c>wind up with their premiums doubled and their coverage cut in half.<u+201d> so much for president obama<u+2019>s oft-repeated promise that the average family would see the cost of coverage decline by $2,500 a year. the burden these increased health-care costs place on working and middle-class americans is inexcusable. but obamacare<u+2019>s failure is having broader implications for economic growth. with gdp already averaging a mere 2% since the recession ended and hovering around 1.5% over the past four quarters, we should be making faster growth a political priority. that is not what the affordable care act is doing. the struggling restaurant industry is the canary in the coal mine for the affordable care act<u+2019>s impact on the broader economy. unless congress repeals and replaces the law, as both donald trump and house speaker paul ryan advocate, with a patient-focused alternative that relies on competition to keep costs down and quality up, the outlook for economic growth and patient care will remain bleak. mr. puzder is the chief executive officer of cke restaurants and an economic adviser to the presidential campaign of donald trump.
the non-affordable care act<u+2019>s restaurant recession - wsj
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