Thursday, April 23, 2009

A Closer Look at GDP -- Government Spending

Today I'm going to look at government spending and GDP so see what the numbers tell us. All of the numbers are in chained 2000 dollars. As always, click on all images for a larger image.



Above is a chart of the respective percentage of GDP of state/local and federal spending. Notice that state and local is by far the largest amount of spending. However, this is a but of a misnomer as the Federal government gives money to states in a variety of ways. So,


Let's look at a chart of all government spending as a percentage of chained GDP. Notice the total government spending as a percentage of chained 2000 GDP has fluctuated between 17.4% and 18.4%. Whether this is good or bad is a matter of opinion and -- more importantly -- political ideology.

The BEA breaks down federal spending into defense and non-defense spending. Above is achart of defense and non-defense spending in chained 2000 dollars. Notice that defense spending is roughly twice as large as non-defense spending.



Finally, we have a chart of defense spending as a percentage of federal spending in chained 2000 dollars. Bottom line: defense spending comprises the bulk of federal spending.