As U.S. economists continue to debate whether the country is in a recession (I'll come right out and say it: we are), one newspaper in the United Kingdom is proclaiming the U.S. is spiraling into another Great Depression.

The Independent points to the increasing number of food stamp usage as proof that the U.S. A. is in dire straits. It points out that more than 28 million Americans now depend on food stamps to feed their families, the greatest number of Americans on the program since it was introduced in the 1960s. Of course, some of the increase is due to greater awareness of the program and the switch from paper coupons to a debit card-style system. Still, those are sobering numbers.

Food stamp usage has increased in nearly all 50 states, and applications to the program are up in 40 states. In Michigan, one in eight residents is in the food stamp program. With the increase in food prices over the past year...six stamp dollars aren't going as far as they used to.

Coupled with this news is the story that the U.S. Treasury has unveiled the most massive overhaul of the U.S. finance system since the Great Depression. The plan would give greater powers to the Federal Reserve and merge other federal agencies. There would also be greater oversight of hedge funds and insurance companies.

Savvy Frugality isn't ready to proclaim the U.S. is headed toward Great Depression II, but it did sound alarm bells about the approaching recession. Increasing fuel and food prices, drops in employment, a stagnating economy and investors hoarding cash and gold all remind me of the bad economic times the country faced in the mid-70's and early 90's.

Many Middle Class families are in a tight spot right now. Perhaps their home has gone to foreclosure, or they have lost a job, or their money just isn't supporting their lifestyle anymore. It was with those families in mind that I wrote about my past recession experience in the Savvy Frugality Recession Guide.

One thing is clear: the U.S. economy is in a downward spiral, and it will take some time for it to regain its footing. In the meantime, many Americans will experience some hard financial times. By doing more with less, cutting out unnecessary expenses, maintaining a cash reserve (emergency fund) and downsizing their lifestyle (if necessary), they should be able to lessen the blow to their pocketbooks.

Note: Savvy Frugality is not a certified financial planner or economist. This is merely Savvy Frugality's opinion.


  1. Tim // April 3, 2008 at 1:42 PM  

    What amazes me though that in even these times when people say things are bad, I can still go out and see people wasting money in malls, waiting in long lines at restaurants, and driving around carelessly. I think right now the gap between the rich (those who can do the aforementioned things) and the poor is what's actually growing.


  2. SavvyFrugality // April 4, 2008 at 9:15 AM  

    Actually, that was the case during the Great Depression. There were two classes of people then: the have's and the have-nots. The people who had jobs and money generally did OK, although they also went through some inconveniences. Those who were unemployed, had no money or lost all of their savings when banks failed had a terrible time trying to survive. What separates the Great Depression generation from this one is that everybody back then tried to conserve what they had. Most people today are accustomed to living in a consumption-driven in which they feel they MUST buy a new car every couple of years, new sneakers every six months, etc.

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