Mean reversion is a statistical concept, particularly popular in finance, which states that over the long term a particular series of events will tend to return to its long-run average value. Continuing in our social trend research series we take another look at what Google can tell us about the state of the US economy. The impact of the recent economic downturn was felt most strongly by those with the fewest economic resources – the poor. These individuals will often turn to government programs for temporary assistance, particularly for food and shelter.
Food assistance is primarily provided via the Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps); housing assistance is provided via section-8 housing vouchers. A review of the Google Trends analysis of the search prevalence for “section 8” and “food stamps” is shown below.
This chart confirms the increase in Americans’ reliance on SNAP and matches the government’s reporting of the same. It’s interesting to note the sharp increase in demand for assistance at the end of 2008 just as the worst of economic recession was triggered by Lehman Brothers’ collapse. It’s also worthwhile to note that this is when the apparent demand for food assistance surpassed the demand for housing assistance. This chart also shows a steady, and slowly rising, demand for housing benefits and shows that the poor were hit hardest by the downturn, and have yet to reap the full benefits of the nascent economic recovery.
A mean reversion analysis suggests that, over the coming months, the demand for food assistance will continue to wane and will return to its historical place below that for housing assistance. What does all this mean? Most likely, this indicates that the worst is over – Americans are getting back on their feet and are becoming less reliant on government support for their survival. Housing will regain its place as the primary economic concern for the poor and section-8 will continue to be an important part of American’s lives.
Finally, as real estate professionals it behooves us to be aware of the continued demand for section-8, both nationally and in each region of the country.