Dice the bacon into bite-sized see pieces and add it to a large pot. Turn the heat to medium and cook until the bacon is crispy.
Remove the bacon from the pot with a slotted spoon, leaving the bacon grease behind in the pot, to a paper towel lined plate and let drain.
Add the flour, garlic powder, and onion powder to the bacon grease left behind in the pot. Whisk constantly for 2 minutes to cook the flour a bit.
Pour in the chicken broth, whisking constantly, until smooth. Bring to a boil.
Once the soup is boiling, add the gnocchi to the pot and cook according to package directions, around 2-3 minutes for refrigerated gnocchi and 3-4 minutes for shelf stable.
While the gnocchi is boiling, heat the cream cheese in the microwave for 20-30 seconds. It should be very soft and melty. If it’s too cold it will clump in the soup.
Once the gnocchi is done cooking, turn the heat to low and stir the cream cheese and cheddar into the soup. Continue stirring until the cheese has melted fully.
Turn the heat off, add half of the bacon to the pot along with half of the green onions. Taste and season with salt and pepper.
Dish into bowls and sprinkle the top with the remaining bacon and green onion, along with some extra cheddar cheese, if desired.