- Campbell’s CEO said there is a “growing preference for home cooked meals.” That could be a canary in the economic coal mine, as people eating out less could impact the GDP. Two consecutive quarters with a reduced GDP signal a recession.
People are opting to eat at home more often these days—and that could be an early warning that a recession is on the horizon.
Campbell’s CEO Mick Beekhuizen, in an earnings call this week, said the company is seeing more people cook at home now than at the start of the pandemic. “We started to see consumer sentiment softening in January,” he said. “This continued throughout [the quarter] with consumers making more deliberate choices with their spending on food. A key outcome is a growing preference for home-cooked meals, leading to the highest levels of meals prepared at home since early 2020.”
Consumers are also buying ingredients that stretch tighter food budgets, he added, such as condensed cooking soups, broth, and Italian sauces. (Spending on discretionary items like crackers and chips declined.)
The rise in at-home cooking indicates consumers are cutting back at spending on restaurants, a further sign of belt tightening. Reduced consumer spending could shrink the gross domestic product—and two straight quarters of that bellwether declining is the textbook definition of a recession.
Demand for staple items like Campbell’s soups, sauces, and breads tends to increase during challenging economic times—as they can transform cheaper cuts of meat or vegetables (or leftovers) into new meals.
All of this comes as Trump’s tariffs are raising fears of an economic downturn. (Tariffs on steel and aluminum doubled on Wednesday.) Ray Dalio, Bridgewater Associates founder, has been sounding the alarm that a recession is likely for months, even as Trump has vacillated on reciprocal tariffs.
“This is not a normal recession kind of situation,” Dalio said in April. “We are changing the monetary order [with the sharp selloff in the bond market].”