More Food Stamps Leads to Increased U.S. GDP?

(WASHINGTON, DC) Low-income participants in USDA’s Supplemental Nutrition Assistance Program (SNAP) generally spend their benefits soon after receiving them. This spending by SNAP households “multiplies” throughout the U.S. economy as the businesses supplying the food and other goods purchased, and their employees, receive additional funds to make purchases of their own. A recent Economic Research Service study examined the multiplier effect of a hypothetical $1 billion increase in SNAP benefits. Most 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 but would redirect some of the cash that they were spending on food at grocery stores to other goods or services. The study predicted that the $1 billion in additional SNAP benefits would raise SNAP households’ food spending by $300 million and their non-food spending by $700 million. This increased spending, combined with the subsequent multiplier-induced spending of both non-SNAP households and SNAP households ($538 million), would raise Gross Domestic Product (GDP) by $1.54 billion.