Big Mac Confirms Weak Global Economy Is Facing More Deflation

Consumers around the world have cut back on buying Big Macs at McDonald's. The company reported its first worldwide sales decline in 13 quarters today. The company's CEO said, "Consumer sentiment in most of our major markets remains low." Yet, the stock price rose nearly 4% today after the company said that its $5 meal deal is a big hit and will be extended.

Other retailers have also announced price cuts to bolster their sales. Target, Walmart, and Aldi have lowered prices on food and other household staples. Burger King and KFC have also introduced $5 meal options. In addition, Amazon, Walgreens, and Best Buy have announced price cuts. 

These deflationary pressures will require retailers and their vendors to work even harder to use technological innovations to boost productivity and to cut costs. (That's especially true in California where the minimum wage at most large fast-food restaurants was raised to $20 an hour on April 1.)

Confirming the global slowdown are recent deflationary trends in commodity markets. Both the price of copper and crude oil have been weak recently (chart). They are both very sensitive indicators of global economic growth.