The Inflation’s In The Poverty
The United States Department of Agriculture (USDA) produces excellent research. In March of 2010 I discussed their report, Energy Use in the US Food System, which noted that the energy-cost intensity of food production was expanding. (see: the Gregor.us blog post Paris Over Amherst: Food Energy and Credit).
Given the strong advance in energy and food poverty the past few years, as reflected in soaring participation in SNAP (food stamp programs), the USDA has produced a new piece of research just last month, Alleviating Poverty in the United States: The Critical Role of SNAP Benefits.
The report concludes that, SNAP benefits have a relatively stronger effect on the depth and severity of poverty than on the prevalence of poverty. Yes, that makes sense. But something additional in a key chart from the report caught my attention. | see: SNAP participants, people in poverty, and the unemployment rate, 1980-2009.
I’ve drawn a red, vertical line in the USDA chart at the year 2003. As you can see, that is the year that the unemployment rate started to fall again after the previous recession, but, that the poverty rate and participation rate in food stamp programs went higher. Why the divergence? The explanation is rather obvious to me. This is the period when energy, especially oil, entered a phase transition to structurally higher prices. It’s also the period that food price inflation, and food price volatility, entered the system. Eventually all series would correlate once again, after the 2008 financial crisis.
There’s certainly no need to post a chart of energy prices here. However, I did find a fresh and up to date chart of food price inflation from a Congressional Budget Service report, Consumers and Food Price Inflation, April 2011. (opens to PDF)
What’s happened in the United States the past decade is that purchasing power for food and energy has declined. While government data shows overall inflation as tepid, the effects of this decline can be observed in real terms in the advance of poverty. This is why I began my research into city level SNAP data years ago, in the automobile and gasoline sensitive economies of southern California. Since that time a number of reports and data have recorded the strong advance of food poverty and energy poverty in the United States. If you are looking for inflation you won’t find it in the aggregate. The inflation’s in the poverty.
Gregor Macdonald believes the world has entered another, historic energy transition. He has written for the Financial Times of London, The Oil Drum, and The Harvard Business Review. He has appeared on MSNBC in the United States, BNN in Toronto, and the Keiser Report out of Paris. His writings and views have been cited in the The Washington Post, The New York Times, The Financial Times, The Los Angeles Times, The San Francisco Chronicle, NPR, WIRED, Macleans, The Toronto Globe and Mail, Foreign Policy, MoneyWeek UK, and the Oil And Gas Journal. He has also made presentations: to the Agoracom Online Conference in Toronto, to the CFA Society of San Francisco, and most recently to the ASPO Conference in Washington, DC. For an excellent overview of Gregor’s views, see this 2010 interview with Chris Arkenberg.
Gregor holds a B.A. in English and Social Anthropology from Denison University, and an M.F.A. in Creative Writing from the University of Iowa Writer’s Workshop. He has worked in Land Use/Environmental Law in Boston; the Television Commercial Production industry in Los Angeles; and in research at the University of California. “Alot of the work I’ve done in the past twenty-five years turns out to have centered around land, landscapes, and cities.” Gregor has also spent time teaching. In particular, advanced English for immigrant professionals in Massachusetts, and creative writing for children through the Royal Parks Education programs, in London.
With Howard Lindzon and Philip Pearlman, Gregor developed the first internet broadcast on the StockTwits.com platform, the popular Sunday night MacroTwits Hour from 2009-2010. Recently, Gregor was named in the Top Twenty Tweeps for Keeps by Barron’s, as people to follow on the Markets and the Economy.
Gregor presently writes for the energy and economics blog, Gregor.us. He remains involved in collaborative research efforts; posts a twice-per-month essay at ChrisMartenson.com; and is pursuing new projects in journalism. He lives with his wife Johanna, a practicing psychotherapist, and his two children in Portland, Oregon.
Contact : gregor (at) gregor.us