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Olive Garden parent company shrugs off concerns of plummeting consumer confidence because restaurant goers continue ‘to treat themselves and splurge’

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  • Stock for Darden Restaurants, which owns Olive Garden and Longhorn’s Steakhouse, neared a 52-week high on Thursday. Investors were able to look past a lackluster quarter because the company said it wasn’t affected by declines in consumer confidence. 

How does a restaurant conglomerate that relies on customers’ discretionary income earn a minor stock rally during a period of declining consumer confidence? By showing Wall Street that while consumers might be worried, they’re still hungry. 

Darden Restaurants, the parent company of popular chains like Olive Garden and Longhorn’s Steakhouse, saw its stock pop as much as 7% on Thursday after executives said during its third-quarter earnings call it had, so far, been impervious to mounting consumer fears. Any worries about an impending economic downturn weren’t stopping customers from going out to eat. 

“Even if people say they’re feeling less optimistic, we haven’t seen a huge correlation between that and dining out,” Darden CEO Rick Cardenas said during the earnings call. “So changes in consumer sentiment haven’t necessarily translated to material changes in consumer spending.”

In fact, Cardenas said he expected eating out to be relatively resistant to any economic anxieties. 

“Dining out is the number one category where people treat themselves and splurge,” he said. 

Investors were so pleased with Darden’s prediction that consumers would keep spending at its restaurants that they overlooked a quarter that failed to meet Wall Street’s growth expectations. Across all of its brands, Darden grew same store sales 0.7%, when investors expected them to grow 1.7%. Darden’s revenue for the quarter was up 6.2% for a total of $3.2 billion. Most of that growth came on the back of its acquisition of Chuy’s, an Austin-based Tex-mex chain. 

However, it was Darden’s bright forecast that powered the stock on Thursday, which at one point throughout the day was just 15 cents from its 52-week high. The company said next quarter it expected same-store sales to grow 3%. Darden CFO Raj Veenam said the company didn’t expect its operating margin to grow “materially” alongside same-store sales. 

Darden declined to provide further comment to Fortune.

Darden executives said they preferred to keep an eye on inflation levels rather than consumer confidence. For Darden, the priority was that incomes continued to outpace inflation, according to Cardenas. If the rate of inflation comes down and essential goods like groceries, gas, and housing cost less, then people would have more money for things like endless pasta and T-bone steaks. 

“It’s giving people a little bit more disposable income and they may be choosing to spend it on dining out versus buying a good,” Cardenas said.

This story was originally featured on Fortune.com



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Second federal judge blocks Trump from banning transgender troops in the military: ‘The government’s arguments are not persuasive’

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A U.S. judge in Washington state has blocked enforcement of President Donald Trump’s order banning transgender people from serving in the military, the second nationwide injunction against the policy in as many weeks.

The order Thursday from U.S. District Court Judge Benjamin Settle in Tacoma came in a case brought by several long-serving transgender military members who say the ban is insulting and discriminatory, and that their firing would cause lasting damage to their careers and reputations.

In his 65-page ruling, Settle — an appointee of former President George W. Bush and a former captain in the U.S. Army Judge Advocate General Corps — said the administration offered no explanation as to why transgender troops, who have been able to serve openly over the past four years with no evidence of problems, should suddenly be banned.

“The government’s arguments are not persuasive, and it is not an especially close question on this record,” Settle wrote. “The government’s unrelenting reliance on deference to military judgment is unjustified in the absence of any evidence supporting ‘the military’s’ new judgment reflected in the Military Ban.”

U.S. District Judge Ana Reyes in Washington, D.C., similarly issued an order blocking the policy last week but then put her own ruling temporarily on hold pending the government’s appeal. The U.S. Circuit Court of Appeals for the District of Columbia late Thursday told the parties that it would consider putting the ruling into effect if “any action occurs that negatively impacts” transgender service members.

In a more limited ruling on Monday, a judge in New Jersey barred the Air Force from removing two transgender men, saying they showed their separation would cause lasting damage to their careers and reputations that no monetary settlement could repair.

Trump signed an executive order Jan. 27 that claims the sexual identity of transgender service members “conflicts with a soldier’s commitment to an honorable, truthful, and disciplined lifestyle, even in one’s personal life” and is harmful to military readiness.

In response, Defense Secretary Pete Hegseth issued a policy that presumptively disqualifies transgender people from military service.

“They can do the right number of pullups. They can do the right amount of pushups. They can shoot straight,” Sasha Buchert, an attorney with the civil rights law firm Lambda Legal, said after arguments Monday in Tacoma. “Yet, they’re being told they have to leave the military simply because of who they are.”

Those challenging the policy and Trump’s executive order in Tacoma include Gender Justice League, which counts transgender troops among its members, and several transgender members of the military. Among them is U.S. Navy Cmdr. Emily “Hawking” Shilling, a 42-year-old woman who has served for more than 19 years, including 60 missions as a combat aviator in Iraq and Afghanistan.

In his ruling, Settle highlighted her case.

“There is no claim and no evidence that she is now, or ever was, a detriment to her unit’s cohesion, or to the military’s lethality or readiness, or that she is mentally or physically unable to continue her service,” he wrote. “There is no claim and no evidence that Shilling herself is dishonest or selfish, or that she lacks humility or integrity. Yet absent an injunction, she will be promptly discharged solely because she is transgender.”

During arguments Monday, Justice Department lawyer Jason Lynch insisted that the president was entitled to deference in military affairs and suggested the service ban was not as broad as the plaintiffs had suggested.

The judge peppered Lynch with questions, noting that the government had offered no evidence that allowing transgender troops to serve openly had caused any problems for military readiness.

Thousands of transgender people serve in the military, but they represent less than 1% of the total number of active-duty service members.

In 2016, a Defense Department policy permitted transgender people to serve openly in the military. During Trump’s first term in the White House, the Republican issued a directive to ban transgender service members, with an exception for some of those who had already started transitioning under more lenient rules that were in effect during the Obama administration. The Supreme Court allowed that ban to take effect. President Joe Biden, a Democrat, scrapped it when he took office.

The rules imposed by Hegseth include no such exceptions.

This story was originally featured on Fortune.com



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Trump’s executive order puts JD Vance in charge of overseeing efforts to ‘remove improper ideology’ from all areas of the Smithsonian Institution

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The vibecession is back. But a change in mood about the economy is often ‘a harbinger of things to come’: a drop in consumer spending and business investment, economist says

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  • America slipped into a “vibecession” under the previous administration because there was a disconnect between how people felt about the economy and the actual state of the economy. It’s come back to haunt us—or it never truly went away.

President Donald Trump’s victory partially had to do with how people felt about the economy. The previous administration could not convince voters the economy was fine because it didn’t feel fine. America was caught in a “vibecession,” one that has come back to haunt us. 

“If you believe the latest survey data … you would think the economy is on the cusp of a recession,” LPL Financial Chief Economist Jeffrey Roach wrote Wednesday. 

Survey data from the University of Michigan revealed consumer sentiment plummeted 11% in March because some Americans of all ages, wealth, and political affiliations became more anxious about the economy. They feared what would become of their personal finances, inflation, business conditions, and the stock market. But economic conditions were little changed, director of the surveys of consumers at the University of Michigan, Joanne Hsu, said in the release. What has changed is the uncertainty surrounding policy. It was the third straight month consumer confidence slipped. Sentiment has plunged 22% since December 2024, the month after Trump was elected.  The latest survey released by The Conference Board showed consumer confidence fell for the fourth straight month and a 12-year low. 

“The decline in confidence for both consumers and businesses is significant and not to be ignored,” Roach said. “A change in feelings about the economic backdrop is often a harbinger of things to come and precedes a downshift in consumer spending and business investment.”

Roach wrote this under a section titled: “vibecession.” Two days earlier, he wrote, “apparently, the vibecession continues,” referencing dragging consumer expectations since mid-2021.

One thing spooking people is tariff whiplash. It sent the S&P 500 into correction territory earlier this month; but it has since rebounded some. The central bank is in wait-and-see mode because it says it suspects tariffs may cause a one-time shock to inflation or stall progress on taming prices. Some economists are sounding the recession alarm. But there is no recession, yet, Roach said. There is weakness appearing in the soft data, such as surveys, but inflation cooled in February. Consumer prices rose only 2.8% from a year earlier. The fear is, however, inflation could heat up again as tariffs and trade wars play out. 

Federal Reserve Chair Jerome Powell touched on it all in the latest Fed meeting where he left interest rates untouched between 4.25% and 4.5%. He mentioned uncertainty was unusually elevated, tariff-induced inflation could be transitory, and the hard data is solid. But the soft data tells a different story.

Powell said the economy appears to be healthy despite tumbling sentiment, which he said probably has to do with “turmoil at the beginning of an administration.” Still, he said he believes the underlying unhappiness Americans have about the economy is because of prices. While prices are no longer escalating so rapidly, there isn’t a way to reverse the pain caused after they hit a four-decade high almost three years ago. 

It isn’t only grocery prices—although that is very much a sore spot for Americans. It’s housing costs, too, that are stoking a vibecession, whether it be under Trump or his predecessor. Since February 2020, home prices have increased 45% and rents 33%, according to Zillow. Plus, mortgage rates are nowhere near their pandemic rock-bottom of sub-3%. A Moody’s economist recently said its housing affordability index that measures the degree a typical middle-income family can afford a mortgage payment on a median-priced home is at its lowest level since the 1980s. That happens to be one reason why home sales are at recessionary levels. And tariffs might only make matters worse in the housing world.

It might be hard for Americans to feel encouraged about an economy where some can’t afford a home and others are struggling to buy groceries.

So far, the most concerning part about the data is “the cutbacks in real consumer spending in January and soft spending in February,” Roach said. When people stop spending and businesses stop investing, it can trigger an economic slowdown.

Roach said a recession comes around every five to six years and only lasts around 10 months, on average, since World War II. But the U.S. economy is resilient even during such times. 

A recession begins with some shock to the economy, such as a banking failure or a global pandemic, Roach said. He doesn’t see such shock on the horizon.

“The economy is probably not in recession at this point, but the uncertainty about Fed policy, interest rates, inflation, and trade wars put a damper on how consumers and businesses feel about current conditions,” he said.

This story was originally featured on Fortune.com



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