Palmer, Alaska. A meat counter displays a variety of sausages at the Fred Meyer grocery store, a Kroger subsidiary.
Michael Seluk | UCG | Universal Images Group | Getty Images
The surge in demand for sausages may offer the latest sign that consumers are tightening their belts as they continue to contend with higher prices.
The hot dog segment saw “modest growth” for one product, according to the Texas Manufacturing Outlook Survey released Monday by the Dallas Federal Reserve Bank. That underscores shoppers’ tendency to opt for cheaper products and cut back on spending overall as purchasing power erodes due to cumulative inflation.
“This category tends to grow when the economy weakens,” said one participant, according to editorial comments included in the Dallas Fed report. That’s because “sausages are a good protein substitute for higher-priced proteins and can ‘stretch’ consumers’ food budgets.”
The story, from Bespoke Investment Group, comes at a time when food prices remain a top concern for consumers. While annual inflation has fallen to levels closer to what economic policymakers consider healthy, the collective increase in prices compared to a few years ago has ordinary Americans feeling dissatisfied with the state of the national economy.
Moreover, it reinforces two themes that stand out as hallmarks of today’s post-pandemic economy.
A growing number of corporate executives, including those at the helm of some of the largest restaurant chains, have warned that the consumer is starting to slow down. In particular, they point to the pressures on lower-income tax brackets as they try to stretch their pockets.
The switch to hot dogs also highlights what experts call “trading down.” Comfortable customers may opt for more expensive proteins like steak or chicken. On the other hand, price-conscious shoppers will look for hot dogs or other less expensive alternatives.
Other food manufacturers who responded to the Dallas Fed survey expressed concerns about their economic health. One said agriculture as a whole was “suffering,” citing challenges from factors like weather and rising costs.
Another said more bluntly that he was “preparing for a recession.”
