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  • Writer's pictureBob Brooks

The McDonalds Factor

Well, McDonalds released their financial numbers to Wall Street this morning. Profits were up, foot traffic was good, and all other numbers met Wall Street’s expectations. I was very interested in whether McDonalds did well this last quarter or if they were starting to slip. When all else fails for the consumer, one can always depend on McDonalds to serve up a cheap meal. It is a bad sign when McDonalds starts to sell fewer Big Macs or even their cheapest fare, the cheeseburger. So far, these numbers support my thesis about inflation-

Prices probably will not go much higher. However, this price level might be here to stay for a long time. Can the consumer withstand a long period of time at these higher prices?

The real price increases are somewhere between 20% and 25% increases, not the 5% to 6% claimed by the government. I see it as prices are as high as the consumer can stand at this point. Without further price increases, it will be simply time that could push the consumer over the edge. Meanwhile, keep an eye on the McDonalds factor. If they start to slip, it could be a telling sign.

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