Government Spending and Gross Domestic Product

Data recently released by the US Department of Commerce suggests that government spending as a percentage of Gross Domestic Product (GDP) remains historically low, despite government efforts to increase its consumption significantly. According to the GDP data for the second quarter of 2009, government consumption stood at 20.7% of the total US GDP (as of June 30). This compares with 23.6% for the same period in 1952, 22.0% in 1962, 21.5% in 1972, 20.7% in 1982, 20.1% in 1992, and 18.6% in 2002. The data indicate that government expenditures as a percentage of GDP have been declining since the early 1950’s, and remain relatively low by this measure. Note that government expenditures for GDP include defense and non-defense spending, as well as spending by state and local governments. The current rates of government consumption as a percentage of GDP are by no means alarming, at least by historical standards. Of greater concern might be the negative impact of net exports/imports on US GDP in recent years.