Tuesday, January 10, 2012

Government Consumption Spending as Percent of Total

While looking at some GDP numbers, I noticed something interesting that I hadn't ever before.  Government expenditures in the GDP report are smaller than those reported in the budget report.  While the budget reports government spending at ~$3.7T annually, the GDP report only reports federal expenditures at $1.25T.  This is because the budget report takes into account all expenditures, but the GDP report only takes into account government consumption expenditures (not entitlement expenditures).  Below is a chart of the ratio of government consumption expenditures (primarily defense spending) to total expenditures.  It shows the way in which entitlement spending has engulfed the Federal Budget since the 1950s.

The missing $2.5T represents the direct shift in the consumption line of GDP from the working population to the non-working population.  Apparently this amount isn't enough for the Occupy Wall Street folks.

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