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SNAP Still an Opportunity, Even as Economy Grows

SNAP Still an Opportunity, Even as Economy Grows

Most businesses would rather forget that 2008 and 2009 ever happened. But it's now a new year and a new decade, and many economists are predicting that the United States will soon begin to emerge from two years of economic doldrums marked by banking crises, recession and rising unemployment.

The New York-based Conference Board's index of leading economic indicators recently rose for an eighth consecutive month. New claims for unemployment have been declining, the stock market has been rallying and building permits have been rising. And, the index of consumer expectations for economic activity during the next six months rose to 75 in December — its highest level since before the recession began in 2007. Consumers and businesses alike are feeling cautiously optimistic about the coming year.

But unemployment remains very high at 10%. And, the U.S. Department of Agriculture recently released an alarming report about food insecurity in the United States. Between 2007 and 2008, the number of U.S. households that had “inadequate or unsure access to enough food for active, healthy living” rose from 13 million to more than 17 million. An even more shocking statistic — the USDA classified 21% of U.S. families with children as food insecure in 2008. One in five is quite a lot.

Data from 2009 is not yet available, and last year's food price declines may have eased some of the pain. Still, this deep, prolonged recession undoubtedly took the biggest toll on the poor and the middle class. Retailers in cities hit hard by high unemployment or the housing bust have surely noticed the soaring usage of food stamps — now officially known as the Supplemental Nutrition Assistance Program. According to a recent report in the New York Times, lately, the program has been enrolling about 20,000 new applicants per day nationally, and there are 270 counties in the U.S. where SNAP usage has increased by two-thirds or more during the past two years.

Food retailing was one of the more resilient industries during the past two years, and if the U.S. economy begins to grow again in 2010, a more optimistic, busier customer base might open up new opportunities for premium items and fresh food categories that were pressured by the recession, such as prepared foods.

Meanwhile, retailers serving areas that were hit hardest by the downturn should look at SNAP as an ongoing opportunity. The stigma that surrounded the program in the 1990s is being eroded by need, and there are still a lot of eligible households that have not applied. For example, while about two-thirds of eligible households participate nationally, the most recent USDA estimates available indicate that only 50% of eligible households in California and only 54% in Nevada were participating in the program. Retailers that help customers through this difficult time by highlighting eligibility or even helping them apply for benefits could earn loyalty for life.

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