The Supplemental Nutrition Assistance Program (SNAP) and the Economy: New Estimates of the SNAP Multiplier

Abstract

The Supplemental Nutrition Assistance Program (SNAP) is one of the largest safety net programs in the United States—the U.S. Department of Agriculture spent $65.3 billion on the program in fiscal year 2018 and served an average of 40.3 million people per month. By design, SNAP has a countercyclical effect on the wider economy, that is, program enrollment increases when incomes fall and vice versa. The Great Recession of 2007-09 motivated new interest in the impacts of different Federal stimulus tools, including SNAP spending. We examine the countercyclical impacts of SNAP by measuring how SNAP benefits affect gross domestic product, employment, and incomes across the farm economy and for all other industries impacted by SNAP. A review of the literature suggests that SNAP spending during a recession stimulates economic output more than several other fiscal policy tools that have been used to increase economic activity. We estimate multiplier effects of SNAP expansion using a newly compiled Social Accounting Matrix multiplier model and the most recent data available for this purpose. We find that $1 billion in SNAP benefits spent during an economic downturn provides direct added income to the businesses where those benefits are spent and indirect added income to their suppliers and their employees, who in turn spend more and further increase the effect of the initial outlay. This multiplier effect generates an additional $0.5 billion, making the total effect of the $1 billion in SNAP benefits $1.5 billion in gross domestic product, which supports 13,560 new jobs—including $32 million added income going to agricultural industries that support 480 agricultural jobs.