Crisis Takes Toll On Economic Indicator

Posted by Greg Michaels, Oct 26, 2009, 3:30pm

economic data.jpgThere are many ways to judge the severity of the recession. You can look at unemployment, GDP, corporate bankruptcies, consumer spending, housing prices, and probably a hundred more pieces of economic data. But perhaps there is no greater indicator that what happened over the past couple of years was a bit more than a minor hiccup than when part of a highly regarded economic data set is phased out of existence. It’s happening soon and measuring the strength of the recovery will be even more difficult now.

The Big Mac Index is losing one of its data points as McDonald’s is fleeing Iceland in the wake of the krona’s collapse.

McDonald’s in Iceland, which imports most of the ingredients it uses in its meals, will shut after costs doubled over the past year, (McDonald’s franchise holder) Lyst said in an e-mailed statement today. The franchise holder said it doesn’t expect the situation to change in the short term.

While the declaration of an end to the global recession will now be on shakier ground due to the Icelandic hamburger shutdown, one last data point was left behind for posterity.

“We would have to raise our prices by 20 percent to get the margin needed on our products,” Magnus Ogmundsson, Lyst chief executive officer, said in a phone interview. “That would have sent a Big Mac to 780 kronur” ($6.36), compared with the 650 kronur it costs today, he said.

At $6.36 per Big Mac, Iceland can take at least a little comfort knowing that it’s going out on top.

McDonald’s Closes in Iceland After Krona Collapse [Bloomberg]

2Recommend this! 20Comments

Comments

Comments hidden for your protection. Show them anyway!

Post Your Comment

You're commenting as a guest.

→ Comment with your user account instead.

After submitting a comment, it may take several minutes to appear. Please only submit your comment once.


  •   [you can change this!]

  •   [your blog/site. optional.]
  • Remember my info ↑