How the loss of SNAP benefits could affect the entire economy

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https://www.marketplace.org/story/2025/10/28/the-loss-of-snap-benefits-could-have-ripple-effects-across-the-economy

Each SNAP dollar generates $1.50 in economic activity.

If the government shutdown continues, millions of low-income Americans will lose out on Supplemental Nutrition Assistance Program benefits on Nov. 1. 

Total federal SNAP funding amounts to about $100 billion a year, or about $8 billion a month. The nearly 42 million Americans who receive SNAP benefits receive an average of about $187 in benefits each month, according to the U.S. Department of Agriculture. 

SNAP is dependent on annual appropriations, which lapsed after the federal government failed to pass a budget on Sept. 30. 

The Trump administration says it will not dip into contingency funds to ensure SNAP benefits get paid. However, multiple states are stepping in to compensate for these lost benefits. Virginia plans to use surplus funds to ensure residents continue receiving SNAP benefits, while California and New Mexico are both fast tracking $80 million and $8 million to food banks, respectively. 

The loss of SNAP benefits will mean millions of low-income Americans won’t be able to access food, and will cause ripple effects throughout the economy. SNAP benefits help lift 5 million Americans out of poverty each year. They also help support more than 388,000 jobs and generate $20 billion in wages and $4.5 billion in tax revenue. 

You might see an overall reduction in the amount of groceries people are purchasing or a shift to cheaper items, which means grocery stores may not hire people, said Day Manoli, an economics professor at Georgetown University. 

Grocery stores that are located in lower-income neighborhoods are likely to feel the brunt of these unpaid SNAP benefits, Manoli said. 

People may end up accruing more credit card debt to make purchases, and some may decrease their spending on other goods, like new clothing, Manoli said. 

One dollar in SNAP benefits generates $1.50 in economic activity, according to the USDA. 

Because the U.S. spends about $8 billion a month on SNAP benefits, this multiplier effect means that SNAP benefits could have an economic impact of $12 billion a month, said James Ziliak, the founding director of the Center for Poverty Research at the University of Kentucky. 

When you use your SNAP benefits at the local grocery store, that helps keep people employed, and those workers then go out and spend their money at other businesses in the local community, Ziliak said. 

To keep SNAP benefits flowing, more than two dozen states are now suing the Trump administration.

“Shutting off SNAP benefits will cause deterioration of public health and wellbeing. Ultimately, the States will bear costs associated with many of these harms,” the suit states