The job market is stumbling and gas prices are soaring

Higher gas prices and fewer jobs could be problematic for restaurants. | Photo: Shutterstock.

Don’t look now but the economy is facing some major question marks.

Gas prices, which appeared to be a potential tailwind for fast-food restaurant sales this spring, have risen by 11% over the past week, according to AAA, as the U.S. attack on Iran led to a spike in oil prices. 

Those oil prices were up another 10% on Friday.

Meanwhile, the job market is slowing. The economy cut 92,000 jobs, including 86,000 jobs cut by private employers. 

Restaurants, which had been a bright spot for job creation in recent months, cut 29,700 jobs in February, according to new data from the U.S. Bureau of Labor Statistics. Hotels cut another 5,000 workers.

All that is taking a major toll on stock prices. Major stock indexes were down about 1% through late-morning trading on Friday. The S&P 500 index is now down about 1% so far this year. 

Most restaurant stocks were down on Friday. The S&P 500 Restaurant Index was down just more than 1%.

A spike in gas prices would be coming at a tough time for much of the restaurant industry that was putting hope in lower prices early this year, combined with larger tax returns, the result of the recent Big Beautiful Bill.

Many restaurants have been losing customers, particularly those with lower incomes, amid inflationary concerns. 

Fuel prices can have an outsized impact on restaurant sales, largely because it takes cash out of people’s hands. It can also be seen as a proxy for inflation, which can have a psychological impact on consumers. Lower-income diners are most affected by rising gas prices.

Jobs may be a bigger potential problem. Restaurants traditionally require consumers to be working and earning money to fuel growth. A slowing job market would spell difficult news this spring. 

Restaurants had been adding jobs even through an economy that has proven difficult. Even with February’s decline, the industry has added about 129,000 jobs over the past year. 

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