More Tales of Inferior Goods

Inferior goods, or products whose demand is inversely related to income, are indicators of an slowing economy. A clear-cut case of this is when consumers (via calculated risk) consciously switch to store-brand products, as they are cheaper and placed sided-by-side with brand-name products such as Tylenol or Advil:

Consumers bought more store-branded products after gas surged to more than $4 a gallon and food costs soared.

Another possible inferior goods response is whether or not people are shifting down from casual dining and fast casual to fast food. We are beginning to see some casualties:

• Bennigan's declared bankrupcy
• Lone Star closed 27 stores and was de-listed from NASDAQ
• Denny's Q2 financials saw a same-franchise-store 3.7% YoY drop
• Rubio's Q2 financials saw a same-store 3.9% YoY drop

Are we now seeing the other side of the dynamic? Both Burger King and McDonald report increased sales: BK at 5.3 and McDonald's at 6.1%.

Now I just have to wait for 6 Flag's Q3 financials to see if my conjecture about it being an inferior goods substitution for out-of-town vacationing is true...