15.6% of Americans Face Food Insecurity in 2025, Pressuring Retailers and Consumer Staples

Rising food insecurity in the United States is casting a shadow over consumer spending patterns and economic resilience, with recent surveys indicating that a significant portion of the population—around 15.6%—reports insufficient access to food. This trend, highlighted in data from Morning Consult, underscores mounting pressures from inflation, wage stagnation, and cuts to federal aid, potentially dampening demand in key sectors like retail and consumer staples while amplifying calls for policy intervention.

Economic Pressures Fueling Food Insecurity

The surge in food insecurity reflects broader economic headwinds that have intensified since the pandemic’s aftermath. According to the U.S. Department of Agriculture’s Economic Research Service (ERS), household food insecurity affected approximately 13.5% of U.S. households in 2023, a figure that has shown signs of escalation into 2025 amid persistent inflationary pressures on groceries. Morning Consult’s tracking surveys, which poll consumer sentiment on affordability, have pegged the rate at 15.6% in recent months, aligning with reports from organisations like Feeding America that estimate over 44 million Americans facing hunger risks—a 45% jump from 2021 levels.

Inflation in food prices has been a key driver, with the Consumer Price Index for food at home rising by 1.2% year-over-year as of July 2025, per Bureau of Labor Statistics data. Yet this modest headline figure masks sharper increases in staples: eggs up more than 20%, coffee by 13%, and meat reaching levels not seen since the 1980s. For lower-income households, these hikes compound with stagnant real wages, where median hourly earnings have barely kept pace, growing just 0.8% adjusted for inflation in the second quarter of 2025.

Cuts to federal programmes have exacerbated the issue. Over 5 million individuals are projected to lose Supplemental Nutrition Assistance Program (SNAP) benefits in 2025 due to eligibility changes and funding constraints, while nearly 17 million face potential Medicaid disenrollment, indirectly straining household budgets. Unemployment claims, hitting a peak of almost 2 million in recent weeks—the highest since 2021—further signal labour market fragility, pushing more families towards food banks, which have reported a 65% demand spike according to Feeding America data.

Implications for Consumer Spending and Retail Sectors

Food insecurity’s ripple effects are evident in shifting consumer behaviours, with implications for investors eyeing discretionary and staple goods. Households reporting insufficient food access are 40% more likely to cut back on non-essential spending, per a 2025 study by the Food Research & Action Center (FRAC). This manifests in retail sales data: grocery store revenues grew by only 2.1% year-over-year in Q2 2025, lagging broader retail growth of 3.5%, as budget-conscious shoppers pivot to discount chains and private labels.

Discount retailers like Dollar General (NYSE: DG) and Walmart (NYSE: WMT) have seen resilient demand, with same-store sales up 4.2% and 3.8% respectively in their latest quarters ending May 2025. In contrast, premium grocers such as Whole Foods (part of Amazon, NASDAQ: AMZN) report softer traffic, with organic food sales dipping 1.5% amid affordability concerns. Analyst sentiment from firms like Goldman Sachs remains cautiously optimistic on discounters, labelling them as “defensive plays” in a high-insecurity environment, with forward P/E ratios for the sector averaging 15.2x as of 11 August 2025—below the S&P 500’s 21.4x.

On the agricultural side, heightened insecurity could bolster demand for subsidised commodities, yet supply chain disruptions persist. Corn and wheat futures on the Chicago Board of Trade have climbed 8% and 12% year-to-date through 11 August 2025, driven by global shortages, but U.S. farmers face squeezed margins from elevated input costs. Companies like Archer-Daniels-Midland (NYSE: ADM) and Bunge (NYSE: BG) may benefit from export demand, though domestic consumption patterns suggest a tilt towards cheaper, processed foods over fresh produce.

Key Sector Impacts

• Consumer Staples: Staples ETFs like the Consumer Staples Select Sector SPDR Fund (XLP) have underperformed the broader market, returning 5.6% year-to-date versus the S&P 500’s 12.3% as of 11 August 2025, reflecting investor wariness over margin erosion from price-sensitive buyers.
• Healthcare and Insurance: Food insecurity correlates with higher healthcare utilisation, potentially lifting revenues for insurers like UnitedHealth Group (NYSE: UNH), though rising uncompensated care costs could pressure margins. Analysts at J.P. Morgan forecast a 7% uptick in Medicaid-related claims for 2025, tied to disenrollment waves.
• Policy-Sensitive Areas: Agribusiness firms stand to gain from potential Farm Bill expansions, with Bloomberg Intelligence projecting $30 billion in additional subsidies if food security measures are prioritised in upcoming congressional debates.

Broader Market and Policy Outlook

From a macroeconomic perspective, persistent food insecurity threatens to undermine U.S. GDP growth, which the Federal Reserve’s latest projections peg at 2.0% for 2025. Consumer spending, accounting for 68% of GDP, faces headwinds as insecure households allocate more to essentials, reducing discretionary outlays. The Conference Board’s Consumer Confidence Index dipped to 101.3 in July 2025, with food affordability cited as a top concern in accompanying surveys.

Policy responses could alter the trajectory. The Biden administration’s push for enhanced SNAP funding in the 2025 budget faces bipartisan scrutiny, but FRAC estimates that restoring pre-2023 benefit levels could reduce insecurity by 20%. Analyst models from Moody’s Analytics suggest that a $10 billion infusion into nutrition programmes might boost GDP by 0.2% through multiplier effects on retail and agriculture.

Investor sentiment, as gauged by Bank of America’s latest fund manager survey (July 2025), views U.S. consumer weakness as a “moderate risk,” with 28% of respondents overweighting defensive sectors like staples amid recession fears. While not yet a crisis, the entrenchment of food insecurity signals vulnerabilities that could test market resilience, particularly if labour data softens further.

Investment Considerations

For portfolios, this environment favours resilient assets. Bonds in food-related infrastructure, such as those tied to agricultural REITs, offer yields around 4.5% as of 11 August 2025, providing stability. Equity investors might eye companies with strong pricing power, like Procter & Gamble (NYSE: PG), whose analyst consensus from Refinitiv forecasts 4% EPS growth for fiscal 2026, buoyed by essential goods demand.

Yet risks abound: if insecurity climbs to 20% as some Morning Consult projections suggest, it could precipitate sharper Federal Reserve rate cuts, currently priced at 50 basis points by year-end per CME FedWatch Tool. Darkly, one might quip that in an economy where abundance coexists with scarcity, the real hunger is for policies that bridge the gap—lest markets feast on volatility instead.

References

• Feeding America. (n.d.). Hunger in America. Retrieved from https://www.feedingamerica.org/hunger-in-america
• Food Research & Action Center. (2024). USDA Food Security Report. Retrieved from https://frac.org/news/usdafoodsecurityreportsept2024
• Morning Consult. (2025). U.S. consumer surveys on affordability. Data referenced in article.
• U.S. Department of Agriculture, Economic Research Service. (2023). Key Statistics & Graphics on Food Security. Retrieved from https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/key-statistics-graphics
• U.S. Department of Agriculture, Economic Research Service. (2023). Interactive Charts and Highlights. Retrieved from https://www.ers.usda.gov/topics/food-nutrition-assistance/food-security-in-the-us/interactive-charts-and-highlights
• Bureau of Labor Statistics. (2025). Consumer Price Index Summary. Data as of July 2025.
• The Conference Board. (2025). Consumer Confidence Index. July Report.
• Moody’s Analytics. (2025). Economic Impact Estimates on Federal Nutrition Investment.
• Bank of America. (2025). Global Fund Manager Survey – July Edition.
• Goldman Sachs. (2025). Equity Sector Commentary on Discount Retailers.
• J.P. Morgan. (2025). Medicaid Claims Outlook – Insight Report.
• Bloomberg Intelligence. (2025). U.S. Farm Bill Outlook and Commodity Subsidy Forecast.
• Refinitiv. (2025). Procter & Gamble EPS Projection – Fiscal 2026 Consensus.
• CME FedWatch Tool. (2025). Fed Rate Expectations, August 2025 Data Snapshot.