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Food Stamps Use Sets New Record.

  • Written by Syndicated Publisher 43 Comments43 Comments Comments
    November 4, 2011

    depression-liberty“Give me your tired, your poor,
    Your huddled masses, yearning to breath free,
    The wretched refuse of your teeming shore,
    Send these, the homeless, tempest tossed,
    I lift my lamp beside the golden door.”

    I am not sure that when the Statue of Liberty was built and that poem inscribed on its base that anyone ever believed that the tired, the poor and the huddled masses would be within the very boundaries of this country.   A country that stood for so long as the very symbol for the freedom, capitalism and liberty that the entire world longed for.

    The torch that stood for opportunity and refuge has since been dimmed as the reality of the near homeless and “tempest tossed” are struggling to make ends meet.   This was never so prevalent as the recent release of the August data of the Supplemental Nutrition Assistance Program (SNAP) which is more commonly referred to as food stamps.

    As of August there is now an all-time record of 46 million individuals utilizing the SNAP program which, assuming there are roughly 190 million working age Americans, that is 1 in 4 working age individuals tapping food stamps.  Of course, as we showed in our recent report on the 3rd Quarter GDP , the average household is seeing nearly 23% of their wages and salaries being consumed by food and energy costs alone.  Furthermore, as inflationary pressures rise there is much less disposable real income available to make ends meet but this becomes even more difficult when real incomes have declined on a year over year basis.  The reality is even worse when you realize that more than 20% of those personal incomes are made up of government transfers today.

    food-stamps-083111The culprit of the demand on food stamps is obvious.  A deteriorating economic growth rate has led to higher levels of unemployment.   As we have pointed out many times in the pastthe last 30 years of deficit spending and excess credit creation have led to the end of “Keynesian Economic Experiment.”  That massive expansion of credit led to a long period of mal-investment combined with the destruction of personal savings fed the economic malaise.  That is just the reality of where we are today.

    Unfortunately, there is no quick and easy remedy to fix the current situation as we face the beginning of a long hard road of debt deleveraging.  This cycle, which takes 10 years on average to complete (and this could well be a longer one than average) is required to clear the excesses from the system.  In turn, this clearing of excess from homes, mortgage debt to credit card debt will allow the economy to grow again on an organic basis as consumers can return to normalized consumption patterns.

    While governments around the world strive to bail out the banks and keep the world from defaulting on its obligations; the masses of citizens struggling to make ends meet amidst the ever tightening stranglehold of debt and unemployment continues.  Will it get better?  Absolutely.   It will take time, a bit more pain and the realization by our leaders that the path they are on does not lead to prosperity.  Only then will things truly begin to get better and the torch that symbolized America’s greatness will once again burn bright.   In the meantime there will be an increasing level of demand food stamps, as well as support from the government itself, to make ends meet.  However, this becomes particularly troublesome as the government tries to figure out ways to cut spending, increase revenues and get the economy growing again.  It is a virtual spiral that ultimately ends up in a collapse unless tough choices are made.   The end game to all of this still remains that we have the opportunity to make tough choices to put America on the glide path to recovery because if we don’t make those choices voluntarily, and soon, they will be made for us.   Just ask your favorite Greek.

    Images: Flickr (licence attribution)

    About The Author

    Lance Roberts – Host of Streettalk Live

    lance robertsAfter having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.

    Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.

    Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.