Source: Bloomberg

 

As the chart above shows, federal outlays for goods, services and employee compensation have fallen in seven of the past nine quarters, according to data compiled by the Commerce Department. The inflation-adjusted annual rate fell 7.9 percent from a peak reached in the third quarter of 2010. Spending by state and local governments has also dropped.

The automatic spending cuts that the  $85 billion of reductions sequester has imposed is “the same old drag” that the economy has been suffering through for most of the past few years. That is according to a report from Milton Ezrati, of Lord Abbett & Co.

Q4 saw outlays fall 7.2% below Q3 2009.

The possible offset: Spending by state and local governments. After falling during and after the financial crisis, tax revenue is now rising. In 2012, outlays for goods, services and salaries slid 0.9% after dropping a big 2.7% in 2011 and a bigger 3.6% in 2010.

 

Source:
Spending Cuts Are Nothing New for U.S. Economy
David Wilson
Bloomberg Chart of the Day, February 27, 2013

Category: Digital Media, Economy, Politics, Taxes and Policy

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5 Responses to “Spending Cuts Are Nothing New for U.S. Economy”

  1. Angryman1 says:

    So your telling me it is normalizing after a abnormally large financial crisis? Nah, never!!!

  2. idaman says:

    I would think that sequestration would be deducted from this trend going forward, thereby increasing the rate of decreasing federal outlays mentioned above. Thereby reducing GDP growth even further.

    ???

  3. JimRino says:

    As the Sequester cuts are going to cut deep into the Southern state economies, is it the Republican position, that they would rather see lots of southerner’s in the unemployment line, then negotiate a fair dial with Obama? Like real tax reform? With the top 1% owning 44% of all assets in America, fixing the tax code seems to be a reasonable position.

  4. [...] Spending Cuts Are Nothing New for U.S. Economy (Big Picture) [...]

  5. DeDude says:

    From Q3 in 2010 to Q4 in 2012 the annualized fall appear to be about 85 billion adding another 85 billion in right away would look fairly drastic. If the cut is applied to the half of the year left then it would be twice of 85 billion on an annualized basis. We will see some effects and maybe enough that a few GOP voters will wake up.