September 2010 was the 23rd consecutive month of reported increase in number of Americans receiving SNAP(Food Stamps) benefits. For the past 116 months since Jan, 2001, the number of participants has been geometrically growing at 0.8% per month, or 9% percent per year. If the SNAP Program was a stock, it would be rated a buy.
There is no weakness showing in this chart. As of September, 2010 there are currently about 43 million participants, or about 14% of US population.
However the high participation rate underscores the fact that if it was not for generous extension of UI up to 99 weeks, the participation rate would be even higher. The SNAP program has real high barriers of entry to boot: for example, in California, the maximum gross monthly income for an individual to qualify for any benefit is set at $1,174 and a household of 4 at $2,389. With average weekly UI benefit of about $300, most households with any member receiving UI will not qualify to receive any food stamps. This is even more so if a household member holds even a part time job.
From a fundamental point of view, SNAP has a long way to go and its future growth only faces budgetary meanness as the only impediment to growth.
Food Stamps and Unemploymentt
Contrary to expectations of high correlation of unemployment and food stamp participation, the correlation form 1969 is only about 60%, which is very unimpressive.
For example, in 1982 with reported average unemployment rate of 9.7%, the food stamp program participation rate was only 9.4%, in 2010 with the same annual unemployment rate of 9.7%, the average annual participation rate now stands at 13%.
However alternate measure of unemployment such as U6 which counts part time and discouraged workers shows much tighter correlation of 82% than standard gauge of U3 when fitted from 1994 onward (when this data became available.)
So while reported unemployment rate U3 and U6 are determinant of number of participants in the SNAP program, unemployment rate is not by any means the most accurate. It is likely that other factors such as very low wages combined with part time employment and duration of unemployment are just as important. Both the unemployment rate and SNAP participation rate are likely reflective of declining standard of living that could continue for many years to come.
________________________________________________________________________
