Serving Up Artificial DEMAND
Jeffrey C. Borneman | December 16, 2014
"The number of beneficiaries who receive compensation from the Supplemental Nutrition Assistance Program (SNAP), otherwise known as food stamps, has topped 46,000,000 for 37 straight months," according to data released today by the Department of Agriculture (USDA).
The question for investors is: How much artificial DEMAND for goods and services is funded by SNAP? With government Food assistence, DEMAND becomes skewed; money that would normally be used to feed a family can be diverted to say, cell phone bills, cable, car payments, fuel, clothing, etc.
The average family receives $252.69 per month in SNAP benefits. The number of families receiving SNAP benefits increasing 25,395in September bringing the total number of families to 22,750,019. That should shock most investors - that's almost 23 million families in America that cannot feed themselves, but let's do the math. This represents a bill of $5.78 billion per month (or almost $79 billion for all of 2014) in free food which allows the most sacred of segregated money (feeding your family) to become 'discretionary'. More math: The USDA's numbers can be calculated thusly: is also about $79 billion per year for 37 months, or over $212 billion of faux DEMAND.
SNAP is only one program - there are many more programs and I'm not bringing this to investor's attention as Ebeneezer Scrooge just before Christmas, but to explain the economy is not gaining steam as we're led to believe with 37 consecutive months of over 46 million families needing Food assistance and another 846 families added per day to the Food dole last month alone.