The latest Food Stamp data (now called SNAP) is out. Here is a chart by reader Tim Wallace showing program usage.
I added highlights in yellow to mark recessions based on NBER Business Cycle Expansions. The NBER is the official arbiter of recession start and end dates.
Food Stamp Participation 1969 to Present
click on chart for sharper image
Tim writes ...
The latest food stamp (SNAP) data is available for September 2011. The reporting lags by two months. We have now surged past 46 million, up to 46,268,257 to be exact.
Note that food stamp usage sloped down throughout the Reagan presidency until it started back up in 1989, ahead of the recession that doomed Bush I, then continued for several more years.
The pattern is similar for the recession of 2001. Food stamp usage picked up in 2001 prior to the recession, then continued for four years after the recession ended.
The current recession ended in mid-2009 but usage spirals higher and higher.
You can see that this "recession" is far more devastating than any in the past as the curve is more like a right angle than a curve.
We have added about 20 million in the latest rise and if the trend continues (as it has so far and as it did in the past two recessions), usage will hit 51 million or so in 2013.
Tim
In the last three recessions, a significant change in upward slope in food stamp participation served as a leading indicator of the upcoming recession. Only the second 80's recession failed to meet that pattern.
Based on demographics as well as weak hiring trends, it is reasonable to assume this steep upward slop will continue.
Please consider the ass backwards Measures to Stimulate Bank Lending in the EMU.
The European Central Bank may announce a range of measures tomorrow to stimulate bank lending, said three euro-area officials with knowledge of policy makers’ deliberations.
Options on the table include loosening collateral criteria so that institutions have more access to cheap ECB cash and offering them longer-term loans to grease the flow of credit to the economy, said the officials, who spoke on condition of anonymity because the discussions are private. Two said an interest rate cut is likely, with only the size of the reduction to be determined for the monthly decision tomorrow.
The ECB is focusing on getting banks lending again rather than increasing its government bond purchases to fight Europe’s debt crisis. The central bank’s insistence that governments take measures to restore investor confidence appears to have paid dividends, with Italian and Spanish yields plunging after Germany and France agreed to move the 17-nation euro area toward a fiscal union, a stance they reiterated today.
Confidence? What Confidence?
There is no confidence. Investors stepped in to buy Italian and Spanish debt hoping to unload to the ECB when it steps up bond purchases in the secondary market. Confidence is nothing more than investors front-running ECB president Mario Draghi's hint that the ECB is about to purchase more sovereign debt.
Ass Backwards Plan
Banks cannot or will not lend in Europe for the same reason they don't in the US.
- Banks are undercapitalized
- Few credit worthy businesses want to borrow
Cutting rates will not fix either of those problems. Worse yet, and with thanks to French President Nicolas Sarkozy, taxpayers and businesses will bear 100% of the responsibility to recapitalize banks.
Europe is in recession. Yet the fools at the EMU and EU want to increase the VAT, increase property taxes, increase fees, etc, to ensure that French and German banks do not shoulder any responsibility for making idiotic loans.
This may (or may not) increase confidence that banks will not go under, but it sure will not inspire consumers to spend or businesses to borrow.
Moreover, lowering interest rates further will put additional stress on those living on fixed income.
Correct Approach
- Force banks, not taxpayers, to take losses for stupid lending decisions
- Force banks to raise capital so they are not capital restrained in lending
- Reduce public sector spending
- Reduce taxes on businesses
- Reduce taxes on private citizens
In every instance, except perhaps number three in some countries, the ECB, EU, EMU, and various national leaders have taken the exact wrong approach.
This is a balance sheet recession, not the garden variety in which the standard solution of central bank rate cutting might appear help. Few seems to have figured this out yet.
Worse yet, most of the few who have figured this out are hell-bent on trying various QE strategies proven to be complete failures by Japan and the US.
Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com