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Monday, February 7, 2011

On the Prospects of G

The chart below shows the annual change in government spending and investment since 1960 (left hand side) and contribution to overall GDP growth (right hand side).



The takeaway? The government sector has been a consistent source of growth (positive in 36 out of 37 years), but with states acting like Europe (i.e. austerity) and the need to cut back, expect this to reverse course in the years to come.

Source: BEA