Monday, May 11, 2009

We're All Euro Now: Government Spending at 45% of GDP

Chuck Dietrick with the details:
One of the more disconcerting statistics is government spending as a percentage of GDP. In 1903, the figure was 6.8% for the U.S. In 2009, it's projected to be 44.72%—a greater than 8% increase over the average of the previous 5 years—not particularly encouraging. Less encouraging are the comparisons with major Western European countries. In 2007, France was at 61.1%, Sweden and Denmark 58.1%, Italy 55.3%, the UK 50%, and Germany 48.8%. Yep, we're on the march to be the equal of those paragons of economic stagnation.
The below chart details this run up since the early 1900's (Federal, State, and Local as a percent of GDP); government spending is now projected to be at the highest level as compared to GDP since WWII.

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6 comments:

  1. LayoffMoveon.comMay 11, 2009 at 7:09 AM

    Wow. I think this is the scariest statistic I've seen yet, and I've done a lot of scouring over the web. I wonder what the historical figures for the European Countries are?

    I'd like to see where we are in the general path to stagnation!

    -jessl
    http://www.layoffmoveon.com
    twitter: __LOMO (that's two underscores)

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  2. antonwMay 11, 2009 at 8:43 AM

    I think government spending in Europe includes socialized medicine.
    That is 13%-15% here. Of course they don't spend the 5% we spend on military.

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  3. sglMay 11, 2009 at 9:29 AM

    Americans want to think that we are better than Europe and I'm sure in some ways we are. I understand that we would all wish to avoid excessive government expenditures. However I wish to challenge the point that "Yep, we're on the march to be the equal of those paragons of economic stagnation." We may see economic stagnation in the next decade, however let's not conclude that higher levels of government spending automatically equates to economic stagnation.

    Since the USA has a growing population and most of Europe has a shrinking population, GDP figure should be measured on the basis of GDP per capita. EarthTrends has that data available. You can find it at http://earthtrends.wri.org/searchable_db/results.php?years=1986-1986,1987-1987,1988-1988,1989-1989,1990-1990,1991-1991,1992-1992,1993-1993,1994-1994,1995-1995,1996-1996,1997-1997,1998-1998,1999-1999,2000-2000,2001-2001,2002-2002,2003-2003,2004-2004,2005-2005,2006-2006&variable_ID=641&theme=5&cID=50,63,70,91,173,189,190&ccID=This data compares the GDP per capita of USA, Denmark, France, Germany, Italy, Sweden, and UK. From this view, these countries seem similar. If you question this approach see the Economist article at www-personal.umich.edu/~kathrynd/MeasuringEconomies.Feb06.pdfLet's avoid simplistic comment such as "All government spending is bad" and "All private spending is good".

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  4. pcleddyMay 13, 2009 at 8:46 AM

    we ARE the govt, btw

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  5. Millers Musings blogJune 12, 2009 at 4:43 AM

    I think you may be doing some double counting. A significant part of Federal spending is grants to states....so if you are just adding State & Local spending and Federal spending you are double counting.

    Also....total expenditures are very heavily laced with transfer payments...Medicare, Social Security, etc.,which are not really government consumption.

    I think a better way to look at the spending impact of Gov't is to total Federal and State and Local Govt Consumption Expenditures. When you do that you'll see an actual longer term decline in the share of government in the economy.

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  6. Jacky GoldbergSeptember 18, 2009 at 2:55 AM

    This data compares the GDP per capita of USA, Denmark, France, Germany, Italy, Sweden, and UK. From this view, these countries seem similar.

    ReplyDelete