ECON What Will You Do When Inflation Forces US Households To Spend 40% Of Their Incomes On Food?

[jward]

What Will You Do When Inflation Forces US Households To Spend 40% Of Their Incomes On Food?
by Tyler Durden

6-8 minutes


Authored by Michael Snyder via The Economic Collapse blog,
Did you know that the price of corn has risen 142 percent in the last 12 months? Of course corn is used in hundreds of different products we buy at the grocery store, and so everyone is going to feel the pain of this price increase. But it isn’t just the price of corn that is going crazy. We are seeing food prices shoot up dramatically all across the industry, and experts are warning that this is just the very beginning. So if you think that food prices are bad now, just wait, because they are going to get a whole lot worse.



Typically, Americans spend approximately 10 percent of their disposable personal incomes on food. The following comes directly from the USDA website…

In 2019, Americans spent an average of 9.5 percent of their disposable personal incomes on food—divided between food at home (4.9 percent) and food away from home (4.6 percent). Between 1960 and 1998, the average share of disposable personal income spent on total food by Americans, on average, fell from 17.0 to 10.1 percent, driven by a declining share of income spent on food at home.

Needless to say, the poorest Americans spend more of their incomes on food than the richest Americans.
According to the USDA, the poorest households spent an average of 36 percent of their disposable personal incomes on food in 2019…

As their incomes rise, households spend more money on food, but it represents a smaller overall budget share. In 2019, households in the lowest income quintile spent an average of $4,400 on food (representing 36.0 percent of income), while households in the highest income quintile spent an average of $13,987 on food (representing 8.0 percent of income).

Needless to say, the final numbers for 2020 will be quite a bit higher, and many believe that eventually the percentage of disposable personal income that the average U.S. household spends on food will reach 40 percent.
That would mean that many poor households would end up spending well over 50 percent of their personal disposable incomes just on food.

At one time that would have been unimaginable, but now everything is changing. As I noted above, the price of corn his increased 142 percent since this time last year…

Corn prices have jumped roughly 142% over the past year to $7.56 per bushel, the highest price seen in eight years for the crop.
A drought in Brazil and increased demand in China have put pressure on global suppliers.

In other areas we are seeing more moderate inflation, but overall we just witnessed the largest increase in food inflation “in almost nine years”…

The average prices in March of 2021 for pork chops and chicken breasts are both up more than 10% compared to March of 2020. Eggs and cheddar cheese are both up 6%.
Looking at all consumer goods as a whole, the latest inflation data in the Consumer Price Index from the U.S. Bureau of Labor Statistics shows the largest month-to-month increase in almost nine years.

Meanwhile, the price of lumber just continues to shoot even higher.
In New Jersey, one man says that the total cost of lumber used in building his new home will reach $70,000…

Tom McCarthy can’t finish building a home in Bergen County, New Jersey because of the lumber shortage.
“There are pieces of wood that we can’t find,” said McCarthy, a real estate broker with the Chen Agency who also builds homes with his father on the side.
McCarthy estimates the cost of lumber for the home will hit $70,000, nearly double the cost of building the exact same home in a nearby town just eight months ago.

Isn’t that nuts?
Instead of building a new home, you could try buying an existing one instead, but real estate prices in many areas have gotten completely insane.
In northern California, one house recently sold for more than a million dollars over listing price…

When a house in Berkeley sold for more than $1 million over its list price in late March 2021, it was covered in media outlets across the Bay Area, including this one.
While the Berkeley sale was particularly sensational — it sold for double its list price and received 29 offers — these individual stories are becoming more common in today’s real estate market, according to recent data and anecdotes from real estate professionals.

I never imagined that I would see such a thing happen.
But one real estate agent says that such wild bidding wars are becoming increasingly common…

And that’s especially true in the East Bay. “People are not surprised when a home goes $1 million over,” said Josh Dickinson, the founder of real estate agency Zip Code East Bay. “When my clients see a house for $1.9 million they’re almost conditioned to think it’ll go over $3 million in Piedmont or North Berkeley.”

This is what the beginning stages of hyperinflation look like, but Federal Reserve officials insist that we have nothing to be concerned about.
In fact, Eric Rosengren just told the press that the crazy inflation we are seeing now “is likely to prove temporary”…

Boston Federal Reserve President Eric Rosengren in an interview with MarketWatch on Wednesday dismissed talk of scaling back asset purchases as premature, and said temporary factors pushing up inflation this spring won’t last.
“My view is that this acceleration in the rate of price increases is likely to prove temporary,” Rosengren said Wednesday.

Do you believe him?
I don’t.
As Simon Black has pointed out, the federal government is just going to continue to borrow and spend trillions upon trillions of dollars…

This is the big one. The US federal government is hoping to spend a whopping $11 TRILLION this year, between the regular budget, COVID stimulus already passed, and all the new legislation they’re proposing.
And it’s only May.
Obviously Uncle Sam doesn’t have the money. So they have to borrow it.

Almost everybody loved it when the federal government started sending out big, fat stimulus checks.
But you aren’t going to love it when a cart of food costs you $400 at the grocery store.
Whenever the government hands out “free money”, someone has got to pay for it, and one way we are paying for it is through higher prices.
If you do not believe that this is a major national crisis yet, you will soon, because it won’t be too long before most of the country is loudly complaining about how nightmarish inflation has become.

Posted For Fair Use

Zerohedge

ZeroHedge - On a long enough timeline, the survival rate for everyone drops to zero

www.zerohedge.com

 

[mikeabn]

Dive into my preps for one thing...

 

[Kathy in FL]

Families with kids will apply for free and reduced lunches and breakfasts. There's WIC. There's SNAP (which will continue to increase if the feds have their way). Section 8 and similar housing assistance will continue to increase only the recipients will pay a smaller percentage of their rent (currently most participants pay a percentage and some pay a pretty high percentage). Utility assistance will go up. People will stop driving, except for necessary trips. Fewer and fewer teenagers will drive ... at least on their parental unit's dime.

Packaging amounts will shrink to try and hide the food inflation at first. Cheap junk will become the mainstay of many diets if it wasn't already. There will be fewer brands on the shelves. The big food conglomerates that own multiple brands will combine them.

Some few people will go back to cooking with staple items but not many. If you don't already know how and are inclined an increase in food prices will not change a lifetime habit like that.

Some people will use it as an excuse to go on a diet.

Mostly people will have no choice but to absorb it in some way. Trade this for that on the grocery list.

 

[Samuel Adams]

I’ll keep pulling weeds.

The drudgery.

 

[agmfan3]

Eat more fresh meat I kill myself, garden food and stored food stuff. Thankful I work at a butcher shop.

 

[West]

Do plan on building up our herd of goats. And supplement their food sources by letting them eat poison sumac and alike on neighbors property's. Pygmies love eating the poisonous plants.

 

[jward]

I've added a few more garden plots, kept the herd, and am considering adding rabbits, or turkeys- mostly I'm ok because I eat a lot of what's produced here, anyway.

Might try to coax the chickens into 100% free range, or get some extra corn planted. Good to be old enough that i don't have to worry bout lil mouths and bellies. Feel really sorry for young parents.

On the other hand, we made huge inroads acclimating people to picking up a box of farmer food so we will undoubtedly see those programs expanded.

 

[Luddite]

Will try to stay one step ahead of the "man".

Surely my cows fartin' and my vegetable fertilizen ' will get more onerous to goobermint.

Farmers are never going to be allowed to make any money.

 

[db cooper]

There are some things that force countries into violent revolution. Starving is one of them. We have been a nation of plenty, actually too much, since recovering from the Great Depression. I think that's our biggest problem is each generation spoiling the next, which has led to such complacency.

For crying out loud, our election was stolen in broad daylight and the elected leaders supposedly on our side (RINO's) don't give a flying "F".

Couple communism with starvation, and I think more and more people will think about getting back that stolen election.

This is a little thread drift, but it does apply. What will we do if food prices rise? I guess we'll just have to pay for it. Plenty of deer on our land, rabbits, etc.

 

[summerthyme]

I've added a few more garden plots, kept the herd, and am considering adding rabbits, or turkeys- mostly I'm ok because I eat a lot of what's produced here, anyway.

Might try to coax the chickens into 100% free range, or get some extra corn planted. Good to be old enough that i don't have to worry bout lil mouths and bellies. Feel really sorry for young parents.

On the other hand, we made huge inroads acclimating people to picking up a box of farmer food so we will undoubtedly see those programs expanded.

Not to drift the thread, but rabbits and geese are excellent survival livestock. Turkeys are generally too stupid to reproduce, and require way too much knowledge, equipment and luck to raise. Commercial breeders *expect* 50% mortality in poults who actually hatch!

We fiddled with them for years...

Summerthyme

 

[jward]

I'm a fan of thread drifting, myself, and appreciate the tips and wanderings, n words o' wisdom-
so ... all thoughts welcomed : )

 

[ktrapper]

Kill it, catch it and grow it.

 

[Samuel Adams]

^^^^ .....in that order ?

 

[Hfcomms]

Got chickens? Easy meat that won’t run away from home and good eggs without additives. Of course feed us going to get more expensive but from late spring to mid fall my chickens filled up on vegetation and bugs not eating many pellets at all.

 

[sunflowerstation]

Well, they say Americans are the fattest people on the globe. This could be an incentive to reduce the extra. But I doubt it.

 

[ioujc]

I will eat the vegetables from my garden and the chickens, eggs and rabbits I am raising. My goats will provide milk and cheese. I have not eaten any type of bread for over three years, except as a rare treat. (Flour is really not good for you) I do eat a lot of tortillas, which I guess will also become a rare treat. I have rice stored, but then, when that is gone, I guess any grains will have to be have to be either quinoa or amaranth.

I will hunt for deer, which are thick out here and I will guard my stuff with the help of my dogs and my "equalizer."

The only things I will need to buy are coffee and sugar, and I may get some bees>>>I have been thinking hard about that....

As far as critter food, the dogs get to share the bunnies and the goat milk/cheese. The chickens and rabbits can easily be fed from plants and stuff from the garden and during the winter they can have the things I store from the garden>>>>spaghetti squash, pumpkins and corn, carrots, rutabagas, turnips, corn, sweet potatoes, mangels, beets, and others.....

Actually, before all that happens, we won't really have to worry about it. I think there will be a great new plan to rid the world of all who do not "get in line" and do what they are told. I probably will NOT be one of those.

 

[NCGirl]

Go on a diet.

 

[twobarkingdogs]

...snip...

Might try to coax the chickens into 100% free range, or get some extra corn planted.

...snip...

Grow some wheat also. Wheat feed sprouts fairly easily and a smallish area say 20x20 isn't that hard to harvest manually or just let the chickens do it themselves.

I do this myself where I'll throw scratch out in a bare area for a couple of weeks to let the chickens kind of ruff up the ground and then throw some wheat feed down, rake it in and put a construction fence around it for a month to allow the seed to take off. Once its about 6 inches of so the chickens seem to leave it alone and I can remove the fence. When the wheat matures and dries out the wheat falls over and the chickens go nuts eating in the little plots. You'll will get a bit more then wheat as other things which was in the scratch will possibly sprout so don't be surprised to see a couple of corn stalks, oats, etc growing up also. It also attracts deer if you are so inclined.

tbd

 

[rob0126]

We have been spending 20-30% for a while now.
And thats by finding deals.

We do shop organic because thats the real food, mostly.

 

[ktrapper]

^^^^ .....in that order ?

Hahaha, maybe I should have said Hunt, fish, trap and garden

 

[20Gauge]

Families with kids will apply for free and reduced lunches and breakfasts. There's WIC. There's SNAP (which will continue to increase if the feds have their way). Section 8 and similar housing assistance will continue to increase only the recipients will pay a smaller percentage of their rent (currently most participants pay a percentage and some pay a pretty high percentage). Utility assistance will go up. People will stop driving, except for necessary trips. Fewer and fewer teenagers will drive ... at least on their parental unit's dime.

Packaging amounts will shrink to try and hide the food inflation at first. Cheap junk will become the mainstay of many diets if it wasn't already. There will be fewer brands on the shelves. The big food conglomerates that own multiple brands will combine them.

Some few people will go back to cooking with staple items but not many. If you don't already know how and are inclined an increase in food prices will not change a lifetime habit like that.

Some people will use it as an excuse to go on a diet.

Mostly people will have no choice but to absorb it in some way. Trade this for that on the grocery list.

Most who cook from scratch and use basic staples won't feel the pressure as much as those who do not.

 

[Samuel Adams]

Go on a diet.

Fasting......for the purpose of physical, mental and spiritual cleansing, in preparation for what is not only coming but what is already upon “us”,
is the best idea I’ve seen come across this forum in a long time, and that’s no slight to anyone.

 

[20Gauge]

There are some things that force countries into violent revolution. Starving is one of them. We have been a nation of plenty, actually too much, since recovering from the Great Depression. I think that's our biggest problem is each generation spoiling the next, which has led to such complacency.

For crying out loud, our election was stolen in broad daylight and the elected leaders supposedly on our side (RINO's) don't give a flying "F".

Couple communism with starvation, and I think more and more people will think about getting back that stolen election.

This is a little thread drift, but it does apply. What will we do if food prices rise? I guess we'll just have to pay for it. Plenty of deer on our land, rabbits, etc.

Heck it only takes a delay in delivery of Chicken Nuggets to start a riot in the USA.

 

[Samuel Adams]

Hahaha, maybe I should have said Hunt, fish, trap and garden

.......or maybe if you had simply defined “it” ?

 

[20Gauge]

We have increased our budget significantly, yet we are only spending 16% of our budget on food. Though the wife asked for an increase in the budget due to price increases and her desire to stock some more.

 

[Macgyver]

Soylent green?

 

[hunybee]

Families with kids will apply for free and reduced lunches and breakfasts. There's WIC. There's SNAP (which will continue to increase if the feds have their way). Section 8 and similar housing assistance will continue to increase only the recipients will pay a smaller percentage of their rent (currently most participants pay a percentage and some pay a pretty high percentage). Utility assistance will go up. People will stop driving, except for necessary trips. Fewer and fewer teenagers will drive ... at least on their parental unit's dime.

Packaging amounts will shrink to try and hide the food inflation at first. Cheap junk will become the mainstay of many diets if it wasn't already. There will be fewer brands on the shelves. The big food conglomerates that own multiple brands will combine them.

Some few people will go back to cooking with staple items but not many. If you don't already know how and are inclined an increase in food prices will not change a lifetime habit like that.

Some people will use it as an excuse to go on a diet.

Mostly people will have no choice but to absorb it in some way. Trade this for that on the grocery list.

all of this has already been happening. like was said in the article, it will only get worse.

 

[mistaken1]

What Will You Do When Inflation Forces US Households To Spend 40% Of Their Incomes On Food?

Demand the government do something just like everyone else.

 

[raven]

ok, quick . . . what's 10% of your income? What's 40%?

I collect that SS. 10% is $250, 40% is $1000.

this IS hyperinflation

 

[Meemur]

I cook from scratch, make my own snacks or eat whole fruit. I may have to go back to bulk buying
with several friends and spitting up the quantities. Right now, I'm switching over to meals heavy on salads
because the cold season veggies are in season right now.

 

[WalknTrot]

Improvise. Adapt. Overcome.
I learned from the best...Grandma F, Grandma C and my mom.

 

[subnet]

Families with kids will apply for free and reduced lunches and breakfasts. There's WIC. There's SNAP (which will continue to increase if the feds have their way). Section 8 and similar housing assistance will continue to increase only the recipients will pay a smaller percentage of their rent (currently most participants pay a percentage and some pay a pretty high percentage). Utility assistance will go up. People will stop driving, except for necessary trips. Fewer and fewer teenagers will drive ... at least on their parental unit's dime.

Packaging amounts will shrink to try and hide the food inflation at first. Cheap junk will become the mainstay of many diets if it wasn't already. There will be fewer brands on the shelves. The big food conglomerates that own multiple brands will combine them.

Some few people will go back to cooking with staple items but not many. If you don't already know how and are inclined an increase in food prices will not change a lifetime habit like that.

Some people will use it as an excuse to go on a diet.

Mostly people will have no choice but to absorb it in some way. Trade this for that on the grocery list.

Yup, the slide into socialism is accelerating.

 

[Freeholder]

I just figured it out, and we are already spending about 23% of our income on food, not counting the animal feed I still have to buy. That's with fixing most stuff from scratch, and hardly ever eating out. Spend about $300/month on food. There's room for that to increase, but I've really got to start getting some stuff from the garden.

Kathleen

 

[raven]

ok, quick . . . what's 10% of your income? What's 40%?

I collect that SS. 10% is $250, 40% is $1000.

this IS hyperinflation

I just figured it out, and we are already spending about 23% of our income on food, not counting the animal feed I still have to buy. That's with fixing most stuff from scratch, and hardly ever eating out. Spend about $300/month on food. There's room for that to increase, but I've really got to start getting some stuff from the garden.
Kathleen

there are three sides of this equation.
1. The typical family spends 10% on food.
2. The 10% does not include other food like dining out and pet food.
2. Inflation will increase that to 40%.

Freeholder has figured it out.
First . . . most of you spend more than 10% on food already
Second . . . no one ever thinks of dining out and pet food as food.
Third . . . it is going to go to much more than 40% of income.

 

[WalknTrot]

there are three sides of this equation.
1. The typical family spends 10% on food.
2. The 10% does not include other food like dining out and pet food.
2. Inflation will increase that to 40%.

Freeholder has figured it out.
First . . . most of you spend more than 10% on food already
Second . . . no one ever thinks of dining out and pet food as food.
Third . . . it is going to go to much more than 40% of income.

Well, too many (even retireds) spend 60% or more for housing right now, so it's gonna leave a mark.

 

[tiredude]

probably lose weight.

 

[SouthernBreeze]

We don't have room for our grocery bill to increase any more than what it already has. We're going to have to make ourselves buy less, and learn to eat cheaper than what we do. My grocery bill runs around $450 every two weeks. That's $900/month. I include in that cleaning products, toiletry items, etc. and dog and cat food. Don't know what percent of Cary's income that is, though. We don't have a garden large enough to sustain us, either, due to our health.

 

[Freeholder]

Well, too many (even retireds) spend 60% or more for housing right now, so it's gonna leave a mark.

This is why I made SURE that I got a place I could pay cash for, even though a lot of people wouldn't have called it livable. Houses can be fixed. But if you don't have any money, or can't buy food, how are you going to pay a mortgage?

Kathleen

 

[bloodztone]

All the signs are popping up. For many who don't believe or who have thought about doing it later, the time is here. We are living on borrowed time, many are telling and showing you what is about to occur. As a community we all tell each other what is happening in this world. We have become brothers and sisters and prepare each other for the coming days. Well those days are knocking at the door and we're seeing the words fly off the pages, "A quart of wheat for a denarius, and three quarts of barley for a denarius, but do not harm the oil and the wine. "

 

[SouthernBreeze]

This is why I made SURE that I got a place I could pay cash for, even though a lot of people wouldn't have called it livable. Houses can be fixed. But if you don't have any money, or can't buy food, how are you going to pay a mortgage?

Kathleen

We did the same with our place. Our house, when we moved in, looked like a run down shack! Built back in the 30's. Cary and I remodeled it over about a 5 year period, and paid cash for that. Today, it doesn't look anything like what it did when we first moved in. No mortgage payments to worry about, either. At the moment, no vehicle payments, and very low monthly utility bills.