U.S. Grocers Brace for Sales Dip as Food Aid Set to Lapse

U.S. Grocers Brace for Sales Dip as Food Aid Set to Lapse
Walmart, Kroger, and food producers warn of short-term sales shock if federal aid remains frozen amid shutdown

As the federal government shutdown drags into its second week, U.S. grocers and food manufacturers are warning of a looming hit to sales if key federal food assistance programs lapse for the first time in modern history.

Retailers including Walmart, Kroger, and Target, along with major food producers such as Smithfield Foods and General Mills, are preparing for what industry analysts describe as an “unprecedented gap” in spending by low-income households beginning in early November.

The lapse would affect the Supplemental Nutrition Assistance Program (SNAP) — commonly known as food stamps, which serves more than 42 million Americans. Funding for the program is set to run out at the end of October if Congress and the White House fail to reach an agreement to reopen the government.

“This is not a theoretical risk, the timing is real, and it’s soon,” said Jennifer Hatcher, chief public policy officer at the Food Industry Association, which represents grocery retailers nationwide. “We’re talking about tens of billions of dollars in lost consumer spending, concentrated among households that spend nearly all of it on food.”

A Pain Point for Retailers, and Families

Grocers say they have seen similar disruptions before, such as the 2013 shutdown that briefly delayed SNAP payments, but never one that fully suspended benefits. The potential shock this time could be far more damaging, industry executives say, because inflation has already eroded consumer budgets, and low-income shoppers are more reliant on federal aid than at any point since the pandemic.

Walmart, which derives an estimated 10% of its U.S. grocery revenue from SNAP households, said in a statement that it is “monitoring the situation closely” and hopes for a “swift resolution that protects families and the economy.”

Smaller grocery chains and rural stores are particularly vulnerable. Independent Grocers Alliance CEO John Ross said many local markets depend on federal aid spending for survival.

“If those payments stop even for a few weeks, some of these stores may not recover,” Ross said. “They don’t have the cash flow cushion that big-box retailers do.”

Food Companies Warn of Ripple Effects

Food manufacturers are also bracing for the fallout. Smithfield Foods, a leading pork producer, said it has begun scaling back production forecasts for November amid uncertainty.

General Mills, which makes Cheerios and other staples, told investors in a note Friday that the “temporary loss of SNAP purchasing power could dent near-term volumes across key categories.”

The Consumer Brands Association, representing packaged food companies, urged Congress to approve a temporary funding measure for SNAP even if broader budget talks remain stalled.

“This shouldn’t be a partisan issue,” said the group’s president, David Chavern. “Ensuring food access for millions of Americans, and stability for the businesses that feed them, is common sense.”

The Political Standoff

The shutdown began after negotiations between President Donald Trump and congressional Democrats collapsed over spending priorities, including immigration enforcement and domestic aid funding.

Trump has argued that emergency measures can keep “essential services” operating, but the U.S. Department of Agriculture (USDA) has warned that without congressional action, it lacks the authority to issue November SNAP benefits.

House Democrats introduced a short-term funding bill last week to restore food aid through the end of the year, but Republicans blocked it, saying such piecemeal bills weaken their leverage in broader spending talks.

“The administration has the power to reopen the government right now,” said Senate Majority Leader Chuck Schumer (D-NY). “Instead, millions of Americans could go hungry because of political brinkmanship.”

The White House has not commented on whether it would consider an emergency order to maintain SNAP funding.

A Broader Economic Concern

Economists warn that the lapse could have ripple effects beyond the grocery aisle. The Center on Budget and Policy Priorities estimates that SNAP spending injects roughly $5 billion a month into the economy, money that circulates through retailers, suppliers, and trucking networks.

If that spending suddenly stops, it could shave up to 0.2 percentage points off GDP growth for the fourth quarter, according to an analysis by Moody’s Analytics.

“This isn’t just a food issue, it’s a consumer demand issue,” said Mark Zandi, Moody’s chief economist. “Lower-income households spend their benefits immediately, which keeps local economies running. The ripple effects of a lapse will be widespread.”

Centrist Perspective: Political Games, Real-World Costs

From a centrist perspective, the SNAP funding crisis illustrates how governing through brinkmanship can backfire — not only for political leaders but for ordinary Americans and businesses.

Fiscal restraint and accountability are legitimate goals, but holding essential programs hostage to partisan gridlockcarries real human and economic costs.

Both sides have political incentives to stand firm, yet neither benefits from the spectacle of empty grocery carts, closed stores, and food insecurity headlines. A balanced compromise — one that reopens the government while committing to longer-term spending reform, would be a win for the economy and for public trust.

As grocers brace for lost sales and families brace for empty pantries, Washington’s stalemate is becoming more than a political story — it’s becoming a test of the nation’s basic competence to govern.