Monday, May 17, 2010

One in Five Oregonians on Food Stamps, Personal Income Is in the Tank, and Government Transfer Payments Go Exponential

The health of our housing market and steadily increasing home prices largely depend on the health of the overall private sector economy. Many believe that the two are rather co-dependent, and that without ever increasing home equity and HELOCS there is no economic prosperity. If that is in fact the case, some recent data from the Oregon Department of Human Services and Haver Analytics / Gluskin Sheff paints a rather grim picture for those thinking of leasing money from a bank for 30 years to "buy" a home any time soon:

"There are classic signs indeed that the recession in the U.S. ended last summer — output, sales, etc. But the depression is ongoing and the reason we say that is because real personal income, excluding handouts from the government, has barely budged. In fact, real organic personal income is nearly $500 billion lower now than it was at the peak 16 months ago and this has never occurred before coming out of any technical recession. It is a depression, as the chart below attests — that is the trendline for real household incomes, until the government comes in to top them off with handouts, subsidies and extended jobless benefits. The share of U.S. personal income being derived from Uncle Sam’s generosity has risen above 18% for the first time ever."

In a more local example of government borrowing/spending and transfer payments propping up the economy and avoiding the grim reality that is organic private sector cash flow, one in five Oregonians are now on food stamps. Modern day soup lines are efficiently and discretely handled electronically with a debit card that is swiped for goods, and can also give the recipient cash back to spend as they choose after a small retail purchase:

"Last month, 64,146 people living in Washington County received food stamps, a 30 percent jump over April 2009. Clackamas County saw a 29 percent increase, with 43,343 people getting help. In Multnomah County, 138,312 people benefited from what is officially called the Supplemental Nutrition Assistance Program, up 21 percent over last year.

Statewide, 701,882 Oregonians received food stamps in April, just under 19 percent of the state's total population. That's well above the national average of 12.9 percent and more than double the 9 percent of 1985, when Oregon was still struggling from the timber crash."