The Macro economy impacts our investments but it’s hard to pin down how impacts on the lowest income segments will change the profits that underpin stock valuations.
The U.S. already has high income inequality.
Life is getting more difficult for the bottom segment as food support is being withdrawn.
More Than Three Million People Have Lost Federal Food Aid
Tighter rules have resulted in higher than expected declines, analysts said
By Dan Frosch. The Wall Street Journal, May 2, 2026
An average of 42.1 million people, including children, received monthly SNAP benefits last fiscal year.
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Enrollment in the Supplemental Nutrition Assistance Program decreased by nearly 3.5 million people since new Trump administration rules were enacted.
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The new rules require able-bodied adults aged 18-64 without young children to work or volunteer, ending eligibility for some non-U.S. citizens.
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The Congressional Budget Office estimated the new rules will reduce SNAP spending by $68.6 billion over a decade.
Under the new rules, able-bodied adults aged 18 to 64 without children under 14 must work, volunteer or participate in approved job-training programs for at least 80 hours a month. The previous age limit for work requirements was 54, and allowed exemptions for adults with children under 18.
Immigrants who enter or remain in the country illegally have never been eligible for SNAP benefits, but the new rules end eligibility for certain non-U.S. citizens in the country with legal permission…
In Arizona, which incorporated the new rules immediately after the legislation’s passage, the number of SNAP recipients has fallen by roughly 50%, according to state data. … [end quote]
I will speculate that many of the Arizonans who were cut from SNAP are Native Americans who live far from job and volunteer opportunities.
Since the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (Welfare Reform), ABAWDs or “Able-Bodied Adults Without Dependents” could only receive benefits for three months within a 36-month period unless they were working or participating in a work program for at least 20 hours a week.
The Families First Coronavirus Response Act (March 2020) suspended this time limit nationwide. During the pandemic, almost every household was bumped up to the maximum possible benefit for their household size, regardless of their specific income level.
In June–July 2023, the suspension of the work requirements ended. This meant the 3-month “ticking clock” started again for adults without children. But the OBBBA of 2025 significantly tightened the screws.
Summary Table: 2023 vs. 2026
| Feature | 2023 Rules | OBBBA (2026) |
|---|---|---|
| Upper Age Limit | 54 | 64 |
| Caregiver Exemption | Child under 18 | Child under 14 |
| Veterans/Homeless | Exempt | Not Exempt |
| Waiver Threshold | General lack of jobs | 10% Unemployment |
| Benefit Funding | 100% Federal | Shared (if error rate >6%) |
Note the 10% unemployment criterion. The last times national unemployment reached 10% (aside from Covid when the entire economy was shut down) were in the Great Financial Crisis (2009) and the recession of the early 1980s. The new SNAP rule prohibits “gerrymandering” to group areas to create areas of 10% unemployment. They have to be counties, cities or Labor Market Areas (where people commute back and forth for work).
So there could be a nasty recession with a lot of job losses but still not reach 10% unemployment where families would qualify for SNAP. I remember the 1980-82 recession where unemployment was 8% for years.
Under the 2026 rules established by the One Big Beautiful Bill Act (OBBBA), a household with zero income and a 64-year-old worker could indeed be denied benefits if the local unemployment rate was “only” 8%.
If that household cannot find 20 hours of work per week in that 8% environment, the “ABAWD Time Limit” kicks in:
They would receive SNAP for 3 months. After the 3rd month, if they haven't documented 80 hours of work/volunteering, their benefits are terminated. They are then barred from receiving SNAP again for the remainder of that 3-year period unless they find a job or move to a county where unemployment is over 10%.
The most vulnerable age in American society is about 50 through 64. This is the age when job discrimination is real, when health may begin to fail and health insurance is very expensive but people are too young for Medicare. Health insurance premiums are legally allowed to be three times higher for a 64-year-old than for a 21-year-old. With the expiration of several ACA tax credits in 2025, many people in their early 60s are facing “full price” premiums that can consume 30% to 50% of a modest household income.
While the headline unemployment rate for people over 55 is often lower than for younger people (around 3.3% in early 2026), that number hides a grimmer reality: duration. If a 55-year-old loses their job, they are significantly more likely to become “long-term unemployed” (27 weeks or more) compared to a worker under 50. Workers in this age group who do find new jobs often have to accept a “seniority penalty,” taking a 20% to 30% pay cut just to get back into the workforce.
The people who are in the worst situation are aging grandparents who are taking care of young grandchildren whose parents are addicts. Now they could be in the situation of needing to work to get SNAP even as their energy is sapped by high schoolers (over age 14) and their own health possibly failing.
Both telehealth abortion and possible even birth control are under legal attack which will lead to many unwanted children.
People will suffer but at least the economy is strong and jobs are available. However, the job market is gradually getting tighter and the ratio of unemployed people to job openings is now over 1. In any case, the amount of spending isn’t enough to swing the markets.
Moving from the bottom to the top, which seems like a different world…
Stock Indexes Are Contorting Themselves to Include SpaceX and OpenAI
Hot stock IPOs are coming to an ETF near you, like it or not
By James Mackintosh, The Wall Street Journal, May 3, 2026
If what you want from your index fund is access to the latest hot stocks, you’re in luck. The passive funds holding trillions of dollars of 401(k)s and other investments are rushing to change their rules as the IPOs of SpaceX, OpenAI and Anthropic draw closer.
The latest, on Thursday, was a proposal from S&P to drop the requirement to make a profit and wait a year for initial public offerings to get into the flagship S&P 500.
Index providers argue that the IPOs are so big that previous precautionary rules have too distorting an effect on their ability to track the market. But really this is about giving users what they seem to want: more hot stocks…
The S&P 500, despite what people believe, is actually a hybrid between an active and passive index. Stocks get in only if they are selected by an index committee. The S&P 500 isn’t the 500 largest companies—more than 50 smaller ones make it in instead…S&P sets a bunch of rules then has people choose from those that qualify…[end quote]
I didn’t know that!
The rest of the article details various indexes, ETFs and stocks. If you invest in indexes, as many do, keep an eye on this.
The Control Panel this week looks much like last week’s.
The SPX and NAZ continue to race to record highs. The Fear & Greed Index is in Greed. The trade is strongly risk-on as stocks and junk bond prices are rising while the price of the 10 year Treasury is falling (yield is rising). The CAPE index is 41 as the bubble is still inflating.
The Treasury yield curve is steepening. 10-Year Real Interest Rate has been in a channel between 1.5% and 2% since 2023. The Chicago Fed’s National Financial Conditions Index (NFCI), which provides a comprehensive weekly update on U.S. financial conditions in money markets, debt and equity markets, and the traditional and “shadow” banking systems, shows looser financial conditions. Financial conditions are loose and getting looser. This provides the borrowed money to inflate asset prices.
USD, gold, silver and copper have stabilized. Oil is rising. Natgas has stabilized.
The Cleveland Fed’s inflation Nowcast is shocking with 2Q26 Quarterly annualized percent change predicted to be 6.13%. This includes energy and food prices and is the basis for calculating the yield on TIPS and I-Bonds.
The Atlanta Fed’s Latest GDPNow Estimate for 2026:Q2 is 3.5%, a very healthy reading and a sudden jump from the last few readings which were around 1.5%.
Economic activity in the manufacturing sector expanded in April for the fourth consecutive month, say the nation’s supply executives in the latest ISM® Manufacturing PMI® Report. The Manufacturing PMI® registered 52.7 percent in April, the same reading as March. The overall economy continued in expansion for the 18th month in a row.
Economic activity in the services sector continued to expand in March, say the nation’s purchasing and supply executives in the latest ISM® Services PMI® Report. The Services PMI® registered 54 percent, the 21st consecutive month in expansion territory. Services represent 80% of GPD. The Employment Index contracted for the first time in four months with a reading of 45.2 percent, a 6.6-percentage point decrease from the 51.8 percent recorded in February.
This didn’t show up in Initial Unemployment claims which is still very low.
Jerome Powell will be turning over the Chair of the FOMC to Kevin Warsh in two weeks. I discussed this here. The markets don’t expect a fed funds rate cut. If Warsh forces one through (not likely) the markets will flip. Since inflation is so high, economic growth is strong and unemployment isn’t growing there’s absolutely no justification for the Fed to cut.
The markets are totally ignoring the war on Iran.
The METAR for next week is sunny.
Wendy
https://www.ismworld.org/supply-management-news-and-reports/reports/ism-pmi-reports/services/march/