The U.S. Economic Slowdown Could Drag on for a Very Long Time
The U.S. economy is going through a very deep economic slowdown, and sadly, it could drag on for a lot longer. If you think everything is great and you are just looking at the stock market, you could be making a big mistake.
You see, it can’t be stressed enough: the U.S. consumer is the key to economic growth or economic slowdown. If the consumer is struggling, the economic slowdown will rage on.
There are a lot of data at the moment that suggest it’s only the stock market that has improved; the economy is still lagging and consumers are in very bad shape.
Food Stamp and Food Bank Usage Surges
Just look at food stamp use in the U.S., for example. As of April, there were close to 43 million Americans who used food stamps. (Source: “SUPPLEMENTAL NUTRITION ASSISTANCE PROGRAM,” U.S. Department of Agriculture, July 10, 2020.)
How significant is 43 million? The entire U.S. population is around 331 million. So, one could say close to 13% of the population in the U.S. can’t even afford food!
Mind you: the food stamp data are from April, a few months old and collected just before the pandemic started. As more data come in, it wouldn’t be shocking to see food stamp usage surge past 50 million.
Know this: food stamps could only be telling us a little about how American consumers are doing. We need to look elsewhere for a more complete picture.
For example, food banks around the U.S. are seeing significant increases in usage.
Consider the La Jornada food pantry in Queens, New York. It used to serve about 1,000 families a week. Now this figure is above 10,000. Simple math here: this represents an increase of 900% relative to normal times.
Not too long ago, this food pantry would see lineups stretching a quarter-mile. Regarding the lineups, Pedro Rodriguez, executive director of La Jornada food pantry, said, “It reminds me of the picture from the Great Depression where a man in a suit and tie is giving another man in a suit and tie an apple. That’s all he had.” (Source: “Hungry New Yorkers form quarter-mile line for free food in Queens,” New York Post, August 22, 2020.)
U.S. Economic Outlook: Dire at the Very Best
Dear reader, I could go on and provide you scores of examples where Americans are struggling to bring even the most basic necessities to their tables.
Now, let me ask this: if consumers are struggling to buy even food, will they go out and buy fancy cars, houses, and gadgets? It’s very unlikely.
Looking at this, I can’t help but be pessimistic on the U.S. economy. We are going through one of the worst economic crises in history.
I stand with the camp that believes we are far from recovery. We might see a quarter or two of some growth, mainly because everything was shut down for a few months. But the economic misery could continue until the average Joe American is able to get a job, save some money, and be optimistic about spending.