A government shutdown's potential halt of SNAP benefits exposes a deep economic dependency on government assistance, impacting not only recipients but also the entire grocery supply chain, from small stores to large retailers, and forcing widespread, long-term changes in consumer behavior and corporate strategies due to persistent inflation and a shifting job market.
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If you haven't heard by now, we are in a
government shutdown and a lot of
government services stop during a
government shutdown. One of the biggest
ones that people are worried about right
now are the SNAP benefits that are going
to come to an end at the end of October
if nothing is done by November 1st,
which it looks like probably there won't
be. But the thing is this end and snap
benefits actually reveals a much bigger
underlying problem of just how dependent
businesses and people are on the
government. Because we all know that a
lot of people rely on SNAP benefits to
be able to get groceries and be able to
feed themselves and their families.
However, one thing you probably don't
know is just how reliant so many
different grocery stores as well as even
big grocerers like Walmart rely on these
SNAP benefits and just how much of a
revenue loss there's going to be due to
there being no more SNAP benefits. Right
now, you have everyday shoppers that are
cutting back right now on all different
types of unnecessary groceries. And 42
million Americans actually depend on
SNAP benefits. And the upcoming stop to
these benefits is forcing a lot of
people to already start rationing out
the groceries they're buying, downgrade
their meals or groceries or skip certain
groceries or some of their favorite
foods altogether. And let's start with
the small independent grocery stores.
Take this store for example called Save
A Lot in Springfield, Missouri. I
believe 65% of the sales of this small
grocery store actually come from
customers who pay with their SNAP
benefits. 65% guys, that is more than
half. I saw another story here in the
Bay Area where 90% of the store sales
come from SNAP benefits. So, if these
people suddenly have no money to go in
and spend, well, gets game over for
these stores. The store manager at this
Save a Lot grocery store is already
reporting fewer customers each day as
shoppers spend all their assistance
early in the month and then they stop
coming in. So, as a result, the store is
ordering less stock and they're having
to cut prices just to be able to keep
some sales coming in and they still end
up throwing away unused goods because
that's how it goes, right? You have a
grocery store. Groceries are perishable.
They can't save them forever. And here's
the thing, grocery stores already run on
razor thin profit margins. It's one of
those very small margin businesses, and
they really only make a couple of
pennies on the dollar. So, they they
rely on bulk purchases. They rely on
selling a lot of volume in order to make
their money. And the owner of this Save
A Lot grocery store says if sales dip
for just a couple of months, he may have
to close his doors for good. So these
grocery stores cannot survive more than
two or three months tops without
receiving these benefits. You would
think it'd be one thing for people not
to get them, but actually these grocery
stores could be shutting down by the
thousands or hundreds of thousands if
people cannot get these benefits. And it
just goes to show you how reliant our
entire economy is on government
assistance, which is not a good thing.
And by the way, I am here at the
waterfront in downtown Tibber. And I had
to do one more video over here before I
left because it is just so beautiful out
here. And I'm going to miss seeing these
views until next summer heading back to
Florida in about a week or so. And the
thing is this grocery store slowdown
doesn't just affect the grocery stores
or the people who receive SNAP benefits.
It also affects local distributors and
suppliers. For example, you have a bread
or milk delivery driver now delivering
25 units instead of 100, shrinking
income throughout the local supply
chain. This can also lead to layoffs as
if there's not as much delivery needed
to be done. Well, then they're going to
start letting people go or cutting back
on people's hours because there's just
not as much work to go around. So, you
can see it has this big ripple effect
throughout the economy. And some people
are even facing a double threat. Like
for example, here's a woman that
receives SNAP benefits, okay? And she
also works at a grocery store and she's
a cashier. And if the benefits stop, not
only is she going to have a hard time
affording groceries, but she might
actually lose her job working at the
grocery store because there's no SNAP
benefits. So, it's it's kind of wild,
guys, when you really look at the
problems with this and how much people
stand to lose. It's kind of shocking.
Like I wasn't even aware that it really
runs this deep into the system and how
much SNAP benefits actually keep the
grocery sector of the economy going. And
I'm not advocating for, you know, having
everybody rely on it. I'm just kind of
shocked by how deep the roots of this
actually go. And then it brings us to a
grocery store like Walmart, which
Walmart is actually the largest grocery
store in the country now. In fact,
Walmart has more grocery sales than any
other grocery chain. Now, Walmart has
actually seen their US sales increase
4.6% year-over-year. So, they're still
doing pretty good. And foot traffic,
according to Placer.ai,
has risen 1% year-over-year in the last
quarter. But even with this increase in
sales, the CEO of Walmart says that
middle and lower income customers are
avoiding purchasing merchandise in
discretionary categories where prices
have gone up. And in order to fight
against this, Walmart has actually
rolled back the prices on 7,400 of its
products during the second quarter. And
that is 2,000 more roll backs than it
did just one year ago. And the CEO says,
"We're keeping our prices as low as we
can for as long as we can." So, they are
really trying to get people to spend
even if they don't have the money right now.
So, even a retailer that's doing really
well right now like Walmart stands to
lose billions of dollars because of the
cut back in the SNAP benefits. Take a
look at this. When the benefits end,
Walmart, since they captured roughly 26%
of the annual SNAP grocery spending last
year, SNAP shoppers spend on average of $2653
$2653
annually at Walmart. And if the SNAP
benefits are halted in November, Walmart
could lose out on $2 billion in sales
since the government spends about $100
billion annually or about 8.3 billion
per month on the program. And it's not
just Walmart that stand to lose a lot of
money. We talked about the local grocery
stores, but also other big retailers
like Target, Amazon, Dollar General,
Kroger. They actually capture a sizable
amount of the SNAP benefit shoppers as
well. So, this really just hits
everybody going down the entire supply
chain. And they even go on to say here
that listen, these smaller stores like
Dollar General probably stand to lose
the most because they're in rural areas
that really rely on SNAP customers and
their benefits. And these stores also
tend to hire employees who rely on those
benefits. So you're going to have more
people like this cashier, you know,
people that work at a store that's being
affected by this and are not getting the
benefits simultaneously. And that's why
so many Americans are willing to go to
great lengths right now in order to make
every single penny count because people
are kind of forced to cut back on things
and be more frugal. This is actually
having an impact not only on the way
people live but also on businesses and
their bottom lines. You see, this video
today is really a great lesson in just
how interconnected every sector of the
economy is. Because when one part starts
to falter, then it kind of puts the rest
of it on a wobble. So what people are
doing right now is people are doing
things like diluting their cleaning
products. You know, they're using less
toothpaste. They're finding ways to make
household supplies last longer, using
less paper towels, things like that.
Some are even buying meat in bulk, such
as half a cow, in order to save in the
long run. This is something that I
remember my family used to do when I was
growing up. In fact, we had an entire
freezer in our basement that was
dedicated to the cow that we would buy
every year. Can't remember if it was
half a cow or a full cow, but basically
we would buy that and that would be
enough meat to last pretty much most of
the year and it would be in this giant
freezer just filled to the max of all
the different cuts from the cow. But
because of these cutbacks in household
supplies, companies like Proctor and
Gamble, for example, are seeing
declining sales volume as consumers make
products stretch longer and don't buy as
much. Proctor and Gamble's fabric care
sales fell 2% with consumers using up
existing inventory instead of buying new
items. and private label generic brands
aren't gaining any ground on Proctor and
Gamble for example, showing that people
are simply consuming less overall. Like
when it comes to laundry detergent, for
example, people are using half doses.
They're using half doses of dishwasher
detergent. They're adding vinegar to
their laundry instead of fabric
softener. They're cutting paper towels
in half. They're skipping more name
brands for generic brands. And the smart
parents out there are actually not
taking their kids grocery shopping with
them anymore because you know how it is.
You have your kid in the shopping cart.
Oh, mommy, mommy, I want this. I want
that. And then in order to just get them
to shut up, you end up buying it. How do
I know that? Even though I don't have
any kids, because I used to be that kid.
I'm sure my mom's going to get a laugh
out of that one. So basically, people
are taking this approach where we're
going to make the products that we buy
last as long as possible and we're going
to wait until every last drop is gone
before we buy more. And when they do buy
it, they're buying it in bulk and buying
the cheapest version possible. So that
way you can make it last as long as
possible. And that's why the sales for
these products are falling. And some
people were able to achieve some sizable
savings from this. Like for example, one
family reduced their grocery bill from
$1,700 in July of this year down to $1,265
$1,265
in September, saving over $400 per
month. And how they did this was by
cutting back on consumption, monitoring
their usage, and buying cheaper versions
of everything. And a lot of these
corporations are like, "Oh, this is
going to blow over. You know, this isn't
going to last forever." Proctor and
Gamble executives told investors that
they expect spending to normalize to 3
to 4% growth eventually as people will
still need basic essentials. Well, yeah,
they will, but they might not buy it
from you. You guys sell name brand
products that are generally more
expensive, so they might start buying
the store brand of everything. But a lot
of families are saying, "No, I don't
think so." You know, the economy has
fundamentally changed right now for the
worse. And it doesn't seem like things
are going to get any better. It's not
like once 2026 rolls around, happy new
year, life is affordable again. No, it's
not going to be like that. So, a lot of
families are saying we're going to keep
our frugal habits indefinitely because
we're realizing this is the only way
that it makes sense to try and survive
right now. Now, that inflation seems to
be here to stay and the Fed really
doesn't care. They just cut interest
rates another 25 basis points, by the
way, as the inflation numbers continue
to go up. So clearly, they don't care
about that. They'd have no interest in
getting inflation back down to their 2%
target. So now that more people are
living paycheck to paycheck, they're
being forced to pinch pennies
indefinitely. And once you get used to
doing things a certain way, you just
kind of keep doing that. Now, I will say
that there are some benefits to this.
Like first of all, it teaches people how
to get by with less. You know, our
ancestors just going back a hundred
years ago didn't have half of the crap
that we have and they were able to live
decent lives and get by just fine,
right? But now today, everybody has to
have everything and they have to have it
yesterday. There's no patience either.
So, this is kind of like forcing people
to relearn how to budget, forcing people
to relearn how to live with less and be
content and satisfied with what they
already do have in life. And that's not
really a bad thing in 2025 when things
have really shifted in the other
Good thing I'm over here today. San
Francisco's covered in fog and we got
nothing but sunshine in Tibberon.
And here's the thing about groceries,
guys, and pretty much everything else
that has gone up in price over the past
5 years is these price increases are
going to be permanent. It's not like
next year or the year after that
everything is just going to get cheaper
again and it's going to go back down to
preandemic pricing. No, because
inflation reres havoc and it creates
permanent price increases unless we have
massive deflation in this country, which
looks like it's not going to happen
because of the Fed's interest rate
policy and possibility of going back to
quantitative easing very soon. Right
now, food at home inflation is running
at 2.7%
year-over-year according to the most
recent data. And that's higher than all
of last year. And if you're not happy
with the prices, well, doesn't matter.
Get used to it. It's pretty much what
they're telling us. Sure, you might see
individual prices for certain items fall
here and there depending on supply and
demand, but all in all, grocery prices
rarely ever come down. Part of the
reason for that is inflation. And a lot
of people don't realize because you save
in dollars and you spend in dollars.
Nobody really has gold and silver for
the most part that your purchasing power
is continuously being robbed every
single month that we get one of these
inflation reports and it's higher than
it should be. And here's the thing. When
prices go up for any one grocery item,
the grocery store is forced to raise the
price for the consumer. Because
remember, grocery stores operate on
razor thin margins. Just a couple of
pennies on the dollar in most cases is
1% 2% margins at best. Okay? And with
margins that low, they cannot afford to
absorb those price increases. So,
they're forced to pass it along to you.
However, if there's a decrease in an
item, for example, in price from their
supplier, they're far less likely to
pass along that decrease in price to
you, they're going to pocket that extra
money so long as they keep selling that
item. So, the experts say that the only
real way we're going to see a decline in
grocery prices, we have to see something
pretty dramatic happen. You would have
to see diesel prices, for example,
plummet through the floor in order for
grocery prices to go down because that's
the main way that groceries are
delivered to stores. And even then, even
if the supplier's prices go down to the
grocery store, the odds of the grocery
store passing along big savings to you,
the customer, are not very likely. Maybe
they'll give you a small discount or
they'll put some of that stuff on sale
if they end up accumulating too much of
it, but that's it. Really the only thing
that you can do in this economy right
now is you have to make more money.
Guys, I keep stressing this to people.
Like along with paying off debt and not
accumulating more debt so that way you
have more money to go around for your
monthly budget, the best thing that you
can do besides that is to earn more by
whichever means necessary as long as
it's legal, of course. And honestly,
it's in your best interest to look for a
supplemental source of income right now.
No matter how secure your job is or how
secure you think your job is, because
really this whole job market is at a
tipping point. You know, the other day
we talked about how Amazon is going to
lay off 30,000 people. It's 14,000 for
now. Some of them right here in the Bay
Area and who knows when the other 16,000
are going to get axed, but you know,
it's going to come. And also UPS
announced that they have cut 48,000 jobs
in the first 9 months of this year. So
just those two alone is almost six
figures. You know, over a 100,000 people
losing jobs just from two companies. And
if you are one of these people who loses
a job, your odds of finding a new one
right now aren't too good because there
are only 0.98 job openings in the United
States for every person looking for a
job. So for the first time in a while,
there are less job openings than people
who are looking for one. And that is not
great news if you are getting a layoff
notice right now. And here's the thing,
that's a dramatic shift in the market
because back in March of 2022, there
were two jobs available for every one
person seeking a job. So the job market
has been cut more than in half just in
the past 3 years. And that's why back
then, you know, companies were offering
all kinds of sign on bonuses, giving
people the opportunity to work from
home, do whatever you want, just work
for us because we need the help. And now
look how much that landscape has changed
just in the past 3 years. So, if you
want to protect yourself from this
current economy, really the only thing
you can do is make sure that you are
earning considerably more than what
you're spending each month and have
those earnings come from at least two,
preferably more sources of income. So
that way, if one source of income goes
away, you still got something. And I
know in the past people didn't have to
do that to survive, but times are
different now, and this is where we're
at. So, you really kind of have to do
this now just to have it as an insurance
policy. And then if you're making
considerably more than you're spending
each month, this is also going to help
you save more for a rainy day, increase
your emergency fund, and actually have
more to rely on in case you do lose your
job. Like, regardless of whatever the
government data says right now, you have
to act like we're in a recession and
that you could lose your job next week.
If you have that sort of mentality and
you shift your saving and spending and
earning habits towards that mentality,
you're going to do well right now.
You're going to be okay. But everybody
who ignores this and thinks everything's
going to be fine and continues to spend
more than they earn, they're the ones
who are going to be crushed when they
lose their job. So, if you enjoyed this
video, make sure you subscribe to the
channel. And if you don't want to wait
for my next video to come out, check out
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