I thought I'd share some useful information about the trajectory of government spending and its impact on inflation. What's different this time is that government has a major influence on jobs data/gdp than ever before. Also worth noting that interest payments relative to gdp on US public debt is close to surpassing the previous high achieved in 1991. Non seasonal adjusted Federal outlays or government spending over the years.
A = US government spending
B= interest payment on the government debt
b= times 1 billion
The fiscal year ends on Sept 30th.
fiscal year. A, B
2024. $6,751b, 881b
2023. $6,134b, 659b
2022. $6,273b, 475b
2021. $6,822b, 352b
2020. $6,553b, 345b
2019 $4,446b, 375b
You will notice how spending under Joe Biden continues to move higher. All they are doing is putting lipstick on a pig. At the end of the day it's still a pig. This is an analogy that the pig is in reference to the US economy. Inflation spending doesn’t benefit poor people that do not own any assets. Inflation is hurting the average American and what do you know, they increased government spending during an election year to buy your support. Fortunately for the rest of us, the people voted and they don’t believe it anymore. GDP is going to be further revised and the labour market will continue to weaken in 2025. They will conveniently blame Donald Trump next year.
The next US recession will be manufactured by the government as Donald Trump will cut wasteful spending which is actually disinflationary. The deficit spending is much to blame for the inflation crisis we experienced these last few years.
Here is an interesting stat:
37.69% of the nominal gdp growth in fiscal 2024 came from government spending. Historically speaking this number should be in the low 20% range. I’ve estimated the government added about 80 bps to nominal gdp above trend.