Stretching the Food Dollar During the Great Recession

American families pinched by the recession that began in 2007 made cuts in their budgets on purchases ranging from cars to television to new homes. Less visible, but no less important, many families changed their food purchasing habits.

Research by the United States Department of Agriculture shows that food purchases declined by around 5 percent on average during the recession (the largest decline in 25 years). As the figure below illustrates, before the recession households in the highest income quintile spent about triple the amount of what the lowest quintile spent on food (the figures are unadjusted, so they do not account for family size, region, etc.). The largest cuts were in the middle of the income distribution (12 percent), and the top (6 percent), but the cuts in the bottom quintile were very slight (about 1 percent – more on this in a moment).

Image
The Big Picture Matters

It’s important to put these data into a bigger picture context. When the Great Depression hit in 1929, families were spending about a quarter of their income on food, but by the mid 1970s, on the eve of another major economic slowdown, the proportion had plummeted to less than 15 percent. In 2010 the proportion was below 10 percent on average. The most important driver of this decline has been technological breakthrough and consolidation in American agriculture, and to a lesser extent a regime of government subsidies that have depressed the price of staple crops.

Eating Out Less and Eating the Cheaper Stuff

Cheaper food prices have impacted consumers across the income distribution in somewhat different ways. Consider the humble head of lettuce. For most Americans, lettuce – particularly the iceberg variety – has been a familiar and affordable offering at the local grocery store for several decades. The food production revolutions of the last twenty years have brought more varieties of lettuces to consumers, and more ready-to-use packaging. Consumers will now reliably find specially packaged, cut, and washed romaine, iceberg, spinach, arugula, and just about any other green in the produce aisle alongside the unwashed varieties.

Food products like bagged spinach have been integral to middle class family diets, but they also are more expensive than the loose or bunched alternative (costing about three times more on average). Research by the USDA illustrates that consumers cut back on bagged greens when their incomes fall, and consume more when it rises: “a 1-percent increase in income typically leads to a 1.2-percent increase in bagged leafy greens’ share of total leafy green purchases, and an income decrease leads to a similar decline in the bagged share.”

The main place where consumers indulged during good times was on food in restaurants and fast food establishments, and this is also where consumers cut back during the recession. Households cut back on food out of the house by 12 percent at the beginning of the recession, compared to about 1 percent on food at home.

…And for the Poorest

Image

To be certain, these same trends have impacted lower income households although they are also caught between two competing dynamics. On the one hand, households in the bottom quintile spend much, much more of their income on food on average than those in the middle and at the top, and probably had much less “give” in their budgets to cut back to lower quality items. The chart above shows that more than a third of their income went to food in 2004, and the proportion has actually increased since the recession began (compared to the much lower and declining shares for the other groups).

On the other hand, these households are closer to the food safety net, which partially buffers their food consumption. The food stamp program (now called the Supplemental Nutrition Assistance Program, SNAP), expanded under the 2009 federal stimulus, and did so much more uniformly than non-federal state and local assistance programs. The result is that SNAP may have helped to bridge the food insecurity gap for millions of poor and low-income American families. This is a really a success of American welfare policy that is widely known to social policy analysts, but does not get much traction in the popular media. Even in this age of relative food prosperity, many of the poorest Americans are as dependent on food prices as households were on average in the 1930s – federal assistance should match this reality.

About Brendan Saloner

I am a postdoctoral fellow at the University of Pennsylvania in the Robert Wood Johnson Health and Society Scholars Program. I completed a PhD in health policy at Harvard in 2012. My current research focuses on children's health, public programs, racial/ethnic disparities, and mental health. I am also interested in justice and health care.
This entry was posted in Blog posts and tagged , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s