Depression watch: Food stamps a sign of recession?

The Indy carries a vivid front page lead story today about the sharp jump in the number of people in the States claiming food aid in the form of food stamps. The article is headed “The Great Depression” - clearly the headline writers at the Indy dont understand the difference between a recession and a slump.

“Getting food on the table is a challenge many Americans are finding harder to meet. As a barometer of the country’s economic health, food stamp usage may not be perfect, but can certainly tell a story….. Dismal projections by the Congressional Budget Office in Washington suggest that in the fiscal year starting in October, 28 million people in the US will be using government food stamps to buy essential groceries, the highest level since the food assistance programme was introduced in the 1960s.”.

The article partly undermines itself by recognising that part of the reason for the uptake infood stamp applications is the better public information and a switch to electronic debit cards for using the stamps. But it is an interesting piece of anecdotal evidence about the recession that is deepening in the States. I noted too that recipients are happy to by-pass the law and trade the food stamps for cash at a discount of 30 per cent.

Uptake of food stamps is rising strongly but the real value of each stamp is declining as food price inflation outstrips general consumer price inflation.

There will be lots of snippets of information coming through about where the US economy is in the economic cycle. Many of them will be anecdotal. Some will have the characteristics of “leading indicators” - the chart below tracks average overtime hours worked in manufacturing industry (clearly down ... as was the case in 2001) together with the monthly real value of retail sales (levelling off).