SNAP is primarily a food-assistance program, but federal economic research finds that additional SNAP spending during a slowing economy also increases GDP and supports jobs.
The Evidence
USDA’s Economic Research Service modeled the effect of increasing SNAP benefits by $1 billion during a slowing economy. It estimated that the increase would raise U.S. GDP by about $1.54 billion and support roughly 13,560 jobs.
USDA also estimated about $32 million in additional income for U.S. agriculture and roughly 480 additional full-time agriculture jobs.
The effect comes from how quickly the money moves through the economy. SNAP benefits are spent at food retailers, which then pay suppliers, distributors, processors, manufacturers, farms, and workers. Those businesses and workers spend part of that income again, creating additional rounds of economic activity.
USDA estimated that an extra $1 billion in SNAP benefits would directly increase SNAP households’ food spending by about $300 million. Because some SNAP benefits replace cash households otherwise would have spent on food, roughly $700 million in household cash becomes available for other goods and services, adding to the broader economic effect.
SNAP benefits move through the economy quickly. When households use benefits at grocery stores and other authorized retailers, that spending becomes revenue for those businesses. Retailers then pay suppliers, distributors, processors, manufacturers, farms, and workers, who in turn spend part of that income elsewhere.
USDA’s Economic Research Service modeled what would happen if SNAP benefits increased by $1 billion during a slowing economy. It estimated that the increase would raise U.S. GDP by about $1.54 billion and support roughly 13,560 jobs.
USDA also estimated about $32 million in additional income for U.S. agriculture and roughly 480 additional full-time agriculture jobs.
The effect is larger than the initial grocery purchase because SNAP benefits can free up some household cash that otherwise would have been spent on food. USDA estimated that an additional $1 billion in benefits would increase SNAP households’ food spending by about $300 million, while roughly $700 million in household cash could then be spent on other goods and services.
That is why SNAP can act as an economic stabilizer during downturns: the assistance is typically spent quickly, creating additional rounds of spending throughout the economy.
The important caveat is that the often-cited $1.54 figure is a modeled increase in GDP during weak economic conditions. It is not a guarantee that every SNAP dollar always produces exactly $1.54 in economic activity, and it does not mean the federal government receives $1.54 back in tax revenue.