Food Stamp Costs Starting to Fall, Almost Certain to Fall Further

The following analysis is from the Center on Budget and Policy Priorities

SNAP spending, which doubled as a share of the economy (gross domestic product or GDP) in the wake of the Great Recession, has begun to decline, as the Congressional Budget Office (CBO) and other experts expected.

  • SNAP spending in fiscal year 2013 was down slightly. Government data show that spending on SNAP (formerly food stamps) fell slightly as a share of GDP in fiscal year 2013, which ended September 30.[2] (See Figure 1.)
     
  • The number of SNAP participants has started to fall. Growth in the number of SNAP participants slowed in 2011 and 2012, and now has begun to decline. Fewer people have participated in SNAP in each of the last three months for which data are available (September through November 2013), compared with the same months of 2012, and in November 2013 more than 750,000 fewer people participated in SNAP than at the height of participation in December 2012. This flattening of participation follows the pattern of previous recessions and is largely accountable for the decline in spending in fiscal year 2013 as a share of GDP.
     
  • The end of the Recovery Act’s benefit increase will result in a large drop in SNAP spending in 2014. U.S. Department of Agriculture (USDA) data show that due to the November 2013 expiration of the 2009 Recovery Act’s benefit increase, SNAP average benefits declined by about 7 to 8 percent, or over $400 million, in the first month without the benefit increase.[3] Table 2 shows the average benefit and dollar amounts of the decline in each state. Over the first four months of fiscal year 2014 (October 2013 through January 2014), SNAP outlays were 7 percent lower than the same period of fiscal year 2013.

CBPP projects that, in fiscal year 2014, SNAP spending will not only continue to decline as a share of GDP but will fall by at least 5 percent innominal (non-inflation-adjusted) terms, largely because of the expiration of the temporary benefit increase.[4] As the economic recovery continues and fewer low-income people qualify for SNAP, CBO expects SNAP spending to fall further in future years, returning to its 1995 levels as a share of GDP by 2019. The effects of the 2014 farm bill, which CBO estimated would cut SNAP by $8 billion over 10 years, would be in addition to the trends that already are emerging.

Read the Full Analysis from the Center on Budget and Policy Priorities

View Other Center on Budget and Policy Priorities' Resources on SNAP

Footnotes

[1] In early February CBO issued a preliminary revised baseline, which does not include the effects of the SNAP cuts from the 2014 Farm Bill. (It was enacted a few days later.) Total SNAP outlays under the February 2014 CBO baseline are only, at most, about 1 percent different from the May 2013 baseline for any given year. CBO did not provide detailed information about assumptions regarding the number of participants or food price inflation. We will update this chart when CBO issues its revised baseline, likely in April.

[2] In fiscal year 2013, SNAP outlays were $82.5 billion, a 2.7 percent increase in nominal terms from 2012; but because the economy (GDP) grew at a faster rate (3.3 percent, according to CBO projections), SNAP costs as a share of GDP declined slightly.

[3] These numbers differ slightly from the published USDA numbers because CBPP made two adjustments to account for one-month anomalies in state data and better reflect the likely annual trend. Specifically, because New York made a one-time legal settlement payment to some SNAP recipients in November 2013, we used data for December 2013 from New York State’s Office of Temporary and Disability Assistance (ODTA) Monthly Caseload Statistics instead of November 2013. For Alaska we used participation and benefit levels for September 2013 instead of October 2013, as Alaska experiences an annual one-month decline in participation and benefits due to payment of oil dividends to residents.

[4] These CBPP projections are based on the May 2013 CBO baseline, adjusted to reflect actual SNAP outlays for fiscal year 2013 (which differed from the CBO projection by only 0.4 percent) and the actual June 2013 Thrifty Food Plan, upon which SNAP benefits for 11 months of fiscal year 2014 are based — and which grew by 0.7 percent over the previous year, compared to CBO’s projection of 2.5 percent annual growth. The CBPP projections assume that in 2015 and later years, food price inflation and SNAP participation will return to the projections in CBO’s May 2013 baseline.