Summary
What I predicted – in 07 Increased non-governmental cost pressures – fuel, feed and other areas. In addition to other cost pressures there will be a mounting of additional cost pressures in the coming months including fuel prices, feed prices, and other areas, such as food production shortages. What was reported on Dec 17 "Many said 2007 has been one of the toughest years in recent history because of a slowing economy and customers who were buffeted by a perfect storm of high gasoline and fuel prices, declining home values, tighter credit because of the sub-prime mortgage fallout, and the U.S. dollar that has steadily fallen in value, making imported products more expensive.”
Analysis
What I predict will happen – In 08
Unfortunately it does not appear that will see a great deal of relief a most of these fronts in 2008. For instance, recent fuel efficiency standards will add cost pressures in the transportation segment in the long term, force more automakers to expand the use of ethanol and cause distributors to plan for replacing equipment. All of these things will drive up transportation costs even further. Furthermore, the demand for corn will drive up the cost of feed, protein, dairy products and many other items. Demand for labor in the service sector will exacerbate the cost pressure. Also, it has become increasingly obvious that the U.S. government is using product safety as an effective arsenal in the war against our trade imbalance. Like the stance on illegal immigration, it demonstrates how bureaucrats can and will affect the outcome of these debates whether or not Congress acts on them. All of these examples of one simple and chilling effect on restaurant operators, they drive prices up!
