Higher SNAP benefits expand spending on food, and on other goods and services

When participants in USDA’s Supplemental Nutrition Assistance Program (SNAP) spend their benefits, the spending “multiplies” throughout the economy because businesses—and their employees—supplying food and other goods purchased by SNAP households receive additional funds to make purchases of their own. In a 2019 study, Economic Research Service (ERS) researchers estimated how a hypothetical $1-billion increase in SNAP benefits in 2016 would have affected spending by SNAP and non-SNAP households. Most SNAP participants spend their own cash in addition to SNAP benefits to purchase adequate food. Thus, SNAP households would spend the full amount of the increased benefits at authorized food stores, but they also would redirect some of the cash that they had been spending on food at home to other goods or services. ERS researchers estimated that the additional SNAP benefits would have the largest effect on SNAP households’ spending on food at home and durable goods. Income is generated for those involved in producing, transporting, and marketing the food and other goods purchased by SNAP recipients, which has a cascading effect of more spending and income. The top categories toward which non-SNAP households would direct this new income were savings, health care, and other services. Because of their low incomes, most SNAP households are likely to spend the entire income increase rather than save a portion of it. These estimates do not take into account current economic conditions and the effect that the COVID-19 pandemic is having on spending behaviors. The data in the chart are part of the analysis found in the ERS report, The Supplemental Nutrition Assistance Program (SNAP) and the Economy: New Estimates of the SNAP Multiplier, and the Amber Waves article, “Quantifying the Impact of SNAP Benefits on the U.S. Economy and Jobs,” released July 18, 2019.