EDITOR NOTE: The market appears to be giving us the narrative that a strong V-shaped recovery is taking place post COVID lockdown. President Trump calls America’s sharp rebound a “rocket ship.” In addition to this, retail sales data appear to be bouncing back. But again, a lot of that spending is coming from government stimulus. In the meantime (and perhaps you don’t see this in your own neighborhood), food banks are popping up everywhere. Take San Antonio, where 243,000 cars were serviced with 23 million pounds of food. This is just one example of several food banks across the country. A V-shaped recovery...seriously?
Since the COVID-19 pandemic began, food bank lines stretching for miles were seen across the US have come to symbolize the financial destruction of households triggered by an abrupt closing of businesses and unprecedented job losses.
Tens of millions of people lost their jobs, and millions more turned to food banks. The demand for food pantries was at record levels as the federal government deployed the National Guard to manage food supply chains to thwart disruptions.
In March, April, and May, food bank systems nationwide reported unprecedented demand as millions of hungry, jobless, and broke Americans, with insurmountable debts and no savings, had no meaningful way of putting food on their tables. To be more specific, food security among households in San Antonio, Texas, was a huge issue, resulting in more than 23 million pounds of food, serving 240,000 cars at drive-through distributions and 5,800 home visits - was seen at the San Antonio Food Bank over the three months.
During the period, retails sales bounced modestly after a stunning record decline - mostly because a quarter of all personal income was derived from the government. Essentially what this means is that the Trump administration activated the money helicopters to avoid a total collapse of the US economy - via unemployment and emergency benefits, welfare checks, and so on.
So here's the issue explained by Twitter handle The Long View - the account notes the stimulus checks that have "bounced" retail sales "like a rubber band" are "all over in a few weeks & with the new uptick we likely see at least six more weeks of contraction with no plug. The real hit starts now."
And Maybe, The Long View is right, because, while President Trump has given several press conferences where he declared that the economy is quickly recovering: "We've been talking about the V," the president said. "This is better than a V. This is a rocket ship" - food bank lines could be, once again, reappearing...
Twitter handle Alastair Williamson posted a video Sunday shows dozens of vehicles waiting in line at what appears to be a food bank in Baltimore, Maryland. We were able to pinpoint the location via looking at local businesses in the video, able to determine the video was taken on York Road in Lutherville-Timonium, MD, outside the Maryland State Fair.
It appears the Maryland State Fair & Agricultural Society, Inc. has been running a food bank out of the fairgrounds for several months.
On Twitter user asked: "How can so many people afford cars and not food?"
Williamson replied: "their auto payments likely deferred for a certain period."
Another Twitter user said: "7M US auto owners/borrowers are 90 days + in arrears."
What this all suggests is that households remain devastated - President Trump's helicopter drops of free money are likely wearing off as people are now having difficulty putting food on the table.
As a consumption hangover is imminent, the Trump administration will need to unleash more stimulus/socialist checks to broke and jobless Americans - though, as per The Long View, it appears consumption is set to plunge before the next checks arrive.
The perfect storm of weak consumption and the emergence of a second coronavirus wave could crush households and businesses in a second-round - food bank lines are becoming the new normal.
Originally posted on ZeroHedge