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State of the Union: The New Face of SNAP

“In a first, working-age people now make up the majority in U.S. households that rely on food stamps — a switch from a few years ago, when children and the elderly were the main recipients.

Some of the change is due to demographics, such as the trend toward having fewer children. But a slow economic recovery with high unemployment, stagnant wages and an increasing gulf between low-wage and high-skill jobs also plays a big role. It suggests that government spending on the $80 billion-a-year food stamp program — twice what it cost five years ago — may not subside significantly anytime soon.

Food stamp participation since 1980 has grown the fastest among workers with some college training, a sign that the safety net has stretched further to cover America’s former middle class, according to an analysis of government data for The Associated Press by economists at the University of Kentucky. Formally called Supplemental Nutrition Assistance, or SNAP, the program now covers 1 in 7 Americans.

Editor’s Note: Secret ‘250% Calendar’ Exposed — Free Video

The findings coincide with the latest economic data showing workers’ wages and salaries growing at the lowest rate relative to corporate profits in U.S. history.

President Barack Obama’s State of the Union address Tuesday night is expected to focus in part on reducing income inequality, such as by raising the federal minimum wage. Congress, meanwhile, is debating cuts to food stamps, with Republicans including House Majority Leader Eric Cantor, R-Va., wanting a $4 billion-a-year reduction to an anti-poverty program that they say promotes dependency and abuse.

Economists say having a job may no longer be enough for self-sufficiency in today’s economy.

“A low-wage job supplemented with food stamps is becoming more common for the working poor,” said Timothy Smeeding, an economics professor at the University of Wisconsin-Madison who specializes in income inequality. “Many of the U.S. jobs now being created are low- or minimum-wage — part-time or in areas such as retail or fast food — which means food stamp use will stay high for some time, even after unemployment improves.”

The newer food stamp recipients include Maggie Barcellano, 25, of Austin, Texas. A high school graduate, she enrolled in college but didn’t complete her nursing degree after she could no longer afford the tuition.

Hoping to boost her credentials, she went through emergency medical technician training with the Army National Guard last year but was unable to find work as a paramedic because of the additional certification and fees required. Barcellano, now the mother of a 3-year-old daughter, finally took a job as a home health aide, working six days a week at $10 an hour. Struggling with the low income, she recently applied for food stamps with the help of the nonprofit Any Baby Can, to help save up for paramedic training.

“It’s devastating,” Barcellano said. “When I left for the Army I was so motivated, thinking I was creating a situation where I could give my daughter what I know she deserves. But when I came back and basically found myself in the same situation, it was like it was all for naught.”

Since 2009, more than 50 percent of U.S. households receiving food stamps have been adults ages 18 to 59, according to the Census Bureau’s Current Population Survey. The food stamp program defines non-elderly adults as anyone younger than 60.

As recently as 1998, the working-age share of food stamp households was at a low of 44 percent, before the dot-com bust and subsequent recessions in 2001 and 2007 pushed new enrollees into the program, according to the analysis by James Ziliak, director of the Center for Poverty Research at the University of Kentucky…..”

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State of the Union: Feeling Not So Good This Past Year

“The last year apparently hasn’t been kind to Americans’ finances, according to a Gallup poll of 1,018 adults conducted Jan. 5 through Jan. 8.

A total of 42 percent say they are in worse financial shape than a year ago, compared with 35 percent who say they’re in better shape.

In late 2012, 38 percent said they were better off than the previous year, and 34 percent said they were worse off.

The 42 percent of people saying their finances are worse off now is 8 percentage points above the 1976-2014 average, while the 35 percent total for people who say they’re in better financial shape, compares with a 38 percent average for that period….”

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CPI Makes its Biggest Leap in Six Months

“U.S. consumer prices rose last month by the most since June, driven up by higher gas prices, but excluding energy, inflation was tame.

The Labor Department said Thursday that the consumer price index rose a seasonally adjusted 0.3 percent in December, after a flat reading the previous month.

Prices increased 1.5 percent in 2013, down from 1.7 percent in 2012. That’s below the Federal Reserve’s target of 2 percent.

Gas prices jumped 3.1 percent in December, the biggest gain since June. Food prices ticked up 0.1 percent, pushed up by higher restaurant costs. Grocery prices were flat, held down by the biggest drop in fruit and vegetable prices in five years.

Excluding the volatile food and energy categories, core prices increased just 0.1 percent in December. Car prices were flat and airline fares plummeted 4.7 percent, the most in 14 years. Those declines were offset by a big increase in clothing costs, which followed three months of decreases, and rents also rose.

Core prices increased 1.7 percent in 2013, down from a 1.9 percent increase in 2012.

Inflation has been held back in recent years by sluggish growth and high unemployment, which makes it harder for retailers and other businesses to raise prices.

Persistently low inflation has allowed the Federal Reserve to pursue its extraordinary stimulus program…..”

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The New Normal of Economic Growth: Private Sector Shrinks While Public Sector Expands

“Despite the Obama administration’s claims of economic growth, the truth is that in most states the private sector is shrinking and the public sector is expanding as a proportion of the workforce. In fact, say researchers Keith Hall and Robert Greene, since the beginning of the Great Recession, the private sector has shed jobs in almost every state, while the increase in taxpayer-funded employment has been masked by the use of contractors rather than outright employees.

“In 2012,” Hall and Greene wrote in a recent report for George Mason University’s Mercatus Center, “public-sector employment made up more than 16 percent of the U.S. labor market.” That in itself is bad enough; but as the men observed, “Direct government employment fails to capture the full impact of government spending on state labor markets.”

To determine that “full impact,” Hall and Greene estimated the number of jobs in each state that are funded by federal contract dollars and added them to the number of actual public employees in that state. When they did that, they found that public-sector employment grew by almost 3.5 million jobs to a national average of 19.2 percent of the workforce. In other words, nearly one-fifth of all workers in the United States are employed either directly or indirectly by government….”

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U.S. GDP Hits 4.1% vs Estimates of 3.6%

“The U.S. economy grew at its fastest pace in almost two years in the third quarter while business spending was stronger than previously estimated, pointing to some underlying strength that should be sustained.

Gross domestic product grew at a 4.1 percent annual rate instead of the 3.6 percent pace reported earlier this month, the Commerce Department said in its third estimate on Friday.

That was the quickest pace since the fourth quarter of 2011 and beat economists’ expectations for an unrevised 3.6 percent rate. The economy grew at a 2.5 percent pace in the April-June quarter.

Business spending increased at a 4.8 percent rate instead of the 3.5 percent pace reported early this month. That reflected stronger growth in intellectual property products than previously reported.

There were also revisions to consumption. Consumer spending, which accounts for more than two-thirds of U.S. economic activity, was revised up 0.6 percentage point to a 2.0 percent rate. The revisions reflected higher spending on both goods and services than previously estimated.

Revisions to spending on gasoline and other energy goods accounted for part of the upward revision to spending on goods, while spending on healthcare and other services also was higher than previously estimated.

Consumer spending grew at a 1.8 percent rate in the second quarter.

Business spending on equipment was revised up to a 0.2 percent pace. It had previously been reported as being flat…..”

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Could 2014 be a breakout year ?

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S&P Shaves Half a Percent Off of 2014 Growth Estimates

“Standard & Poor’s reduced its estimate for next year’s U.S. economic growth to 2.6 percent from the 3.1 percent growth it expected last quarter.

The credit ratings agency said in a report that “significant downside risks” from government spending cuts sparked the change, CNBC reports.

“We’ve lowered our forecast for U.S. GDP growth in light of the additional sequester [automatic] spending cuts in 2014 as well as the potential for another political standoff in Washington after the October government shutdown,” S&P explains.

To be sure, Democrats and Republicans in Congress struck a deal Tuesday that reduced some of the automatic spending cuts slated for fiscal 2014, which began Sept. 30.

The deal calls for a discretionary budget of $1.012 trillion for the year, compared to the $967 billion amount originally slated under sequestration.

The bipartisan accord does increase deficit reduction by $23 billion with the extension of a Medicare spending cut.

S&P also cites the Federal Reserve as a wild card….”

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Will Poor Consumer Confidence Spark a Surprise Stimulus Package From the Fed ?

So the last time we had a very poor consumer confidence reading the fed opened the QE3 spigot. Could we be in for additional stimulus for the upcoming holiday season?

“Consumer Confidence in U.S. Drops for Sixth Consecutive Week

By Ben Schenkel – Nov 7, 2013 9:45 AM ET

Consumer confidence in the U.S. fell for the sixth week in a row, reaching the lowest level in a year as Americans struggled to make ends meet.

The Bloomberg Consumer Comfort Index declined to minus 37.9 in the week ended Nov. 3, the worst reading since October 2012, from minus 37.6. The one-week drop was the smallest since the partial government shutdown ended in the middle of last month….”

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Jobs Report Reveals a 35 Year Fresh Low in the Participation Rate

“The only two charts that matter from today’s distroted nonfarm payrolls report.

First, the labor force participation rate, which plunged from 63.2% to 62.8% – the lowest since 1978!

But more importantly, the number of people not in the labor force exploded by nearly 1 million….”

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State of the Union


“Did you know that the number of Americans on welfare is higher than the number of Americans that have full-time jobs?  Did you know that 1.2 million public school students in the U.S. are currently homeless?  Anyone that uses the term “economic recovery” to describe what is happening in the United States today is being deeply insulting to the nearly 150 million Americans that are considered to be either “poor” or “low income” at this point.  Yes, things are great in New York City, Washington D.C. and San Francisco, but almost everywhere else economic conditions continue to steadily get worse.

The gap between the wealthy and the poor is at a level that America has never seen before, and this is beginning to create a “Robin Hood mentality” that could cause a tremendous amount of social chaos in the years ahead.  Anger at the “haves” in America continues to rise at a very alarming pace, and the “have nots” are becoming increasingly desperate.  At some point all of this anger is going to boil over, and you won’t want to be anywhere around major population centers when that happens.

Despite unprecedented borrowing by the federal government in recent years, and despite unprecedented money printing by the Federal Reserve, poverty in the United States keeps getting worse with each passing year. The following are 29 incredible facts which prove that poverty in America is absolutely exploding…

1. What can you say about a nation that has more people getting handouts from the federal government than working full-time?  According to the latest numbers from the U.S. Census Bureau, the number of people receiving means-tested welfare benefits is greater than the number of full-time workers in the United States.

2. New numbers have just been released, and they show that the number of public school students in this country that are homeless is at an all-time record high.  It is hard to believe, but right now 1.2 million students that attend public schools in America are homeless.  That number has risen by 72 percent since the start of the last recession.

3. When I was growing up, it seemed like almost everyone was from a middle class home.  But now that has all changed.  One recent study discovered that nearly half of all public students in the United States come from low income homes.

4. How can anyone deny that we are a socialist nation when half the people are getting money from the federal government each month?  According to the most recent numbers from the U.S. Census Bureau, 49.2 percent of all Americans are receiving benefits from at least one government program.

5. Signs of increasing poverty are even showing up in the wealthiest areas of the nation.  According to the New York Post, New York subways are being “overrun with homeless“.

6. According to the U.S. Census Bureau, approximately one out of every six Americans is now living in poverty.  The number of Americans living in poverty is now at a level not seen since the 1960s.

7. The gap between the rich and the poor in the United States is at an all-time record high.  The wealthy may not consider this to be much of a problem, but those at the other end of the spectrum are very aware of this…..”

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Your Tax Dollars at Work

Earlier this week we had a look into the wonderful world of $MCD; now let’s look at $WMT.

“On Tuesday, the BLS engrossed in the same frenzy of openly making up data like the Dept of Labor has been with the initial claims data ever since early September when it started upgrading its California “systems” and never finished, announced that while only 140K or so jobs were created in September, nearly 700K full-time jobs were added as over 500K part-time jobs were converted into full-timers. On the surface this is great news… until one actually looks for empirical evidence that this is happening anywhere besides the data manipulating, massaging and fabricating models used by the BLS. And one certainly won’t find it at the biggest private employer in the US – Walmart, which just announced that a whopping 475,000 of its employees earn at least $25,000 a year. Great news, right? Sure, until one considers that WMT has over 1 million employees, which means that well over 50% of Wal-Mart’s employees make a tiny $25,000 year.

From Bloomberg:

Wal-Mart has provided some new and useful information: More than 475,000 of its 1 million hourly store employees earn at least $25,000 a year for full-time work. This figure comes from Bill Simon, the president and chief executive officer of Walmart U.S., who presented (PDF) it at Goldman Sachs’s (GS) Global Retailing Conference last month. The statistic, which was listed under the heading “Great job opportunities,” means as many as 525,000 full-time hourly employees earn less than $25,000 a year.



OUR Walmart, the union-backed workers’ group that’s been staging protests and asking for higher wages, pointed this out during a press conference in Washington, D.C., on Wednesday. (The company’s presentation is also on its website.) Three store associates, as well as three Democratic members of the House of Representatives, called on the retail giant to pay all of its full-time workers at least $25,000 a year.

Wal-Mart is adamant: the pay is fair.

“We have hundreds of thousands of associates who are making $25,000 a year or more,” says Kory Lundberg, a Wal-Mart spokesman. “And the opportunity exists for those who aren’t to grow into the career they want. We promote 160,000 people a year.” Lundberg also explained how to parse some of Wal-Mart’s figures. The company has 1.3 million hourly workers, which led OUR Walmart to claim at the press conference that 825,000 of them made less than $25,000 a year. Lundberg points out that Simon’s presentation was referring to the 1 million who work in the stores. (The rest work as truck drivers and at the Bentonville (Ark.) headquarters, among other places.) So about 52 percent of its associates make less than $25,000 a year—not 63 percent.

The other side disagrees. As expected, the minimum wage workers demand – what else – higher wages.

“A decent wage is their demand—a livable wage, of all things,” said Representative George Miller (D-Calif.). The problem with companies like Wal-Mart is their “unwillingness, not their inability, to pay that wage,” he said….”

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China Export Data Unexpectedly Disappoints

“Chinese exports fell 3.1% year-over-year (YoY) in June, missing expectations for a 3.7% rise.

Meanwhile, imports fell 0.7% YoY, missing expectations for a 6% rise.

Trade balance also came in shy of expectations, widening to $27.1 billion.

This compares with a 1% rise in exports and 0.3% fall in imports in May.

Export growth was expected to stay muted because of a weak global economic environment….”
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U.S. Trade Deficit Widens by 12.1%

“WASHINGTON (MarketWatch) — The U.S. trade deficit widened by 12.1% in May to $45.0 billion, the Commerce Department said Tuesday. This is the largest deficit since last November and was well above expectations. Wall Street economists polled by MarketWatch had forecast a deficit of $40.3 billion. The deficit has jumped in two straight months after falling to $37.1 billion in March….”

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Emerging Markets Fall the Most in a Week on China Concerns

“Emerging-market stocks fell, heading for the biggest drop in more than a week, as growth in Chinese service industries slowed and consumer shares sank amid surging oil prices. South Korea’s won led currencies lower.

Daphne International Holdings Ltd. (210), a footwear retailer, sank the most in four years in Hong Kong as crude climbed above $100 a barrel for the first time since September and the city’s retail sales trailed estimates. Industrial & Commercial Bank of China Ltd. tumbled 2.5 percent.Fubon Financial Holding Co. (2881) slumped 5.1 percent in Taipei after raising $850 million from a share sale. The won and India’s rupee both weakened 0.9 percent versus the dollar, while the ruble fell 0.2 percent, heading for its lowest level in a year.

The MSCI Emerging Markets Index lost 1.6 percent to 916.99 at 2:56 p.m. in Hong Kong, poised for the biggest drop since June 24. Oil’s surge, sparked by political turmoil in Egypt and an industry report showing U.S. stockpiles shrank, threatens to curb consumer spending power and spur inflation for energy-importing countries such as China and India. China’s non-manufacturing purchasing managers’ index fell to 53.9 in June, the lowest level since September, even as the government seeks to boost the economy’s reliance on services.

“Investors are hoping the spike is temporary because a sustained and continued gain in oil prices will hurt economic growth prospects,” said Allan Yu, who helps manage about $10 billion at Manila-based Metropolitan Bank & Trust Co. “Given the size of its economy, a slowdown in China will have an impact on its neighboring markets.”

China, Indonesia…”

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ISM Data Hits the Skids, Reading Not Seen Since 2009

“The Institute for Supply Management (ISM) has released its Report on Business for the month of June, and the numbers are pretty bad. In fact, the June report appears to be a four-year low at 47.0. The ISM represents that this is the worst reading since May of 2009. The ISM is trying to signal that the news is not as bad as might appear. It shows that future optimism did not flinch, suggesting the drop in current conditions could be temporary.

Tuesday’s report was positive on the jobs component and on the purchase volumes. The report sentiment represents that business impediments had a less favorable tone compared to last month. “No difficulties” was still the most popular response, but working capital shortages increased and skilled labor shortages decreased. Here is a breakdown of some of the data:

  • The six-month outlook came in at 66.1….”

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European Manufacturing Shrinks Less Than Expected

“Euro-area manufacturing output contracted less than initially estimated in June, adding to signs the currency bloc’s economy is beginning to emerge from a record-long recession.

A gauge of manufacturing in the 17-nation euro area increased to 48.8 last month from 48.3 in May, London-based Markit Economics said today. That’s above an initial estimate of 48.7 on June 20. The gauge has been below 50, indicating contraction, since July 2011.

Today’s PMI data followed an encouraging euro-zone economic confidence report for June that recorded the biggest jump since July 2010. The 17-nation economy’s 18-month recessionprobably ended in the second quarter, as the economy stagnated before returning to growth in the following three months, according to a Bloomberg News survey of economists.

European Central Bank President Mario Draghi said last week that policy makers stand ready to act to support economic growth in the euro area. The Frankfurt-based central bank cut its benchmark interest rate to a record-low 0.5 percent in May.

The ECB’s monetary policy “will stay accommodative for the foreseeable future,” Draghi said. “We have an open mind about all other possible instruments that we may consider proper to adopt.”…”

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U.S. Manufacturing Slows in June

“U.S. manufacturing activity growth slowed slightly in June as the pace of hiring and overseas demand weakened, making the second quarter the weakest for the sector in the last four, a survey showed.

Financial data firm Markit said its “flash,” or preliminary, U.S. Manufacturing Purchasing Managers Index fell to 52.2 in June from 52.3. A reading above 50 indicates expansion.

June’s 52.2 reading was also the average for the second quarter, behind the 54.9 average in the first three months of the year and the worst showing since the third quarter of 2012.

“Slower growth in the goods-producing sector looks likely to have acted as a drag on the wider economy,” said Markit chief economist Chris Williamson. The U.S. economy grew at a 2.4 percent rate between January and March.

Markit’s output index rose to 53.9, a three-month high, from 52.7 in May while the gauge of new orders also rose to its highest level since March, offering some hope. But the pace of hiring slowed to 50.4 from 52.6, reflecting the weakest rate of job creation since January 2010….”

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China’s Manufacturing Accelerates to the Downside Threatening European Recovery

“China’s manufacturing is shrinking at a faster pace this month, a trend that threatens to stem an economic recovery in the euro area from the currency bloc’s longest-ever recession.

A preliminary reading of 48.3 for the Chinese Purchasing Managers’ Index (EC11FLAS)released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists. In Europe, a composite index based on a survey of purchasing managers in the services and manufacturing industries rose to 48.9 from 47.7 in May, Markit Economics said. While that’s the highest in 15 months, a measure below 50 still indicates contraction.

China’s manufacturing weakness, along with a cash crunch in the nation’s money market, will test how far Premier Li Keqiang is willing to go in sacrificing short-term expansion for more-sustainable long-term growth. After record credit in the first four months of the year failed to stoke growth, China’s State Council, led by Li, said yesterday that the financial system needs to do a better job of supporting the economy.

The China PMI Index “is a reminder that a strong euro-zone export recovery is unlikely” to materialize soon, said Martin Van Vliet, senior euro-area economist at ING Bank NV in Amsterdam. “Any further recovery later in the year is likely to be very slow and bumpy.”

Euro Stagnation…”

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