The Supplemental Nutrition Assistance Program (SNAP) has been providing nearly 48 million Americans with financial assistance through the provision of funds for the purchase of groceries. Approximately 15% of Americans today are receiving benefits through SNAP, however this support network is diminishing drastically after a $5-billion decrease occurred on Friday, November 1st. This cut will remove about 6% of the funding previously assigned to SNAP and leave thousands of low-income Americans without sufficient aid. This decrease is a direct result of the expiration of a 2009 Congressional initiative which increased the funding for SNAP in response to the impending global economic crisis. The recipients of these benefits are going to become increasingly timid in their consuming habits which will manifest both through their necessary expenditures for items such as groceries, as well as their discretionary spending. This hesitance to indulge in flagrant consumerism comes as the country is heading into the holiday season, causing there to be a grim forecast regarding the economic growth expected during the fourth quarter of the year. Holiday shopping may see a reduction this season as a direct result to the increased economic instability faced by low-income American families, an instability which is in part due to the scaling back of SNAP benefits.
As these consumers brace themselves for the decrease in financial assistance, they will become increasingly wary of spending the precious little money which they do have at their disposal; grocers and retailers in low-income areas will see decreased spending as their target demographic is reduced to an even more desperate financial situation. Large retailers whose clientele base is predominately working class Americans, such as Walmart, are predicted to experience a reduction, if only miniscule, in their profits. However, the effect upon these large retailers is nothing compared to the impact this cut will have upon the one in five American families currently receiving SNAP benefits and small, local businesses. Although larger corporations may face slightly decreased revenue heading into the holiday season, it is the local grocery stores and markets, which serve as bastion for healthy and reasonably-priced alternatives to massive chains and which populate small, working-class and low-income neighborhoods, which will be receiving the brunt of this decreased expenditure; their client base will be forced to shop at larger chain providers, like Walmart, that have the capacity to offer lower prices.
All in all, the reduction of SNAP benefits for American families will have the largest negative impact upon working-class families and the small, local retailers and grocers who provide for them. That being said, the hesitance in consumption caused by this decrease will also negatively impact the nation’s economy as a whole dues to decreased consumption. This news should weaken the USD over the next few months, as more and more Americans feel the negative effects of reduced government benefits. This, in turn, will drive down consumer sentiment and further weaken the U.S. economy.