SNAP Cuts Led to $4 Billion Economic Slump Last Month — Here’s How It Will Hit Your Wallet
Written by
Josephine Nesbit
Edited by
Renee Ross
Commitment to Our Readers
GOBankingRates' editorial team is committed to bringing you unbiased reviews and information. We use data-driven methodologies to evaluate financial products and services - our reviews and ratings are not influenced by advertisers. You can read more about our editorial guidelines and our products and services review methodology.
20 Years
Helping You Live Richer
Reviewed
by Experts
Trusted by
Millions of Readers
Extra SNAP payments during the pandemic expired in March, leaving millions of Americans with smaller SNAP balances in their accounts to pay for elevated grocery prices.
This cut reduced monthly benefit amounts by at least $95 as Americans continue to deal with the largest annual increase in food prices since the 1980s, per the U.S. Government Accountability Office. According to Morgan Stanley estimates, this reduction has had a rippling effect as cuts led to a $4 billion economic slump in March while consumers tightened their belts.
U.S. retail sales fell unexpectedly in March, dropping 1% as consumers cut back on buying motor vehicles and other big purchases, Reuters reported. Barron’s noted that retail sales are typically an essential gauge of shoppers’ confidence and financial stability. Consumer health is vital in determining the overall state of the U.S. economy.
“The expiration of SNAP benefits is another catalyst that will lead consumers at the lower end of the income spectrum to become more cautious spenders and allocate a greater share of their wallet away from discretionary items,” said Ellen Zentner, chief U.S. economist at Morgan Stanley in New York, as reported by Reuters.
While sales fell across the board for many brick-and-mortar stores, online retail sales are up 1.9%. Reuters pointed out that this is likely due to consumers looking for deals and discounts to get lower prices. Data from Bank of America also revealed that Americans slowed down their usage of credit and debit cards to its weakest pace in two years due to slower wage growth, fewer tax refunds and the end of pandemic-era SNAP benefits, per Bloomberg. A slowing economy could be an indicator of a potential recession, meaning less money headed to your wallet and more moving out of it.
However, on the bright side: The latest consumer price index from the Bureau of Labor Statistics showed that producer prices fell by the most since the onset of the pandemic, which Bloomberg says is evidence of easing cost pressures.
More From GOBankingRates
