- Posted by TheArmoTrader on March 9th, 2014 at 7:56 pm
There’s this common knowledge of acceptance that government spending is out of control. That the government is spending increasingly more and more money every year. This is quite wrong actually. Government spending, as defined by Government Expenditures (outlays), has been actually pretty muted over the past few years. Now, it’s important to distinguish government spending from deficit spending. Deficit spending is the amount spent after taxes. Government Spending is the just the total amount spent by the federal government, regardless of taxes collected.
So the other day, Obama came out with his 2015 budget, which called for $3.9 Trillion in spending. Now, to the average layman, that might sounds ridiculous. How is the government spending nearly 4 trillion in just one year? But if you take a look at some basic graphs, you’d see spending is not exploding, and in fact, is below trend.
Let’s take a basic look at Government Spending over the past ~50 years. Does anything strike you as out-of-the-ordinary?
There has nearly been an uninterrupted climb in the nominal amount of spending….up until 2010. Since then, spending has gone sideways. Spending is at the same level as it was in 2010. That’s not a normal occurrence to have spending remain flat for multiple years. And who knows how much lower the spending level would be had Congress not passed the American Recovery and Reinvestment Act (where the bulk of spending came within the first 2-2.5 years).
Spending as a percent of GDP, after a quick spike due to automatic stabilizers kicking in and the passage of the ARRA , has collapsed back to normal levels.
Here’s a chart that shows the average government spending growth in the previous 7 recoveries vs the current one. You can see how unusual this current recovery’s spending “growth” has been.
Here’s the 3-year changes in real government spending. Unprecedented Austerity.
What about government employees? I believe Obama will be the first president to finish his presidency with less public sector workers than when he took office (please correct me if I’m wrong, but I believe I saw/read that somewhere). While the chart below includes state/local employees, federal government employees is at the lowest level since 2001.
We have seen unprecedented trends in government spending over the last few years. While people think government spending is out of control (and that Obama is a big-government spending socialist), the opposite is in fact taking place. We are experiencing austerity. It might not be to the level of some European countries, but the economy is definitely hurting from government spending being cut.
In fact, I purpose Obama follows Ronald Reagan’s footsteps. Increase Government Spending by 47% from his initial year in office. That means, the 2015 budget should call for 5.15T in spending.
Note “exploding” spending: 3.9T only 0.4T more than 2009. RT @BloombergNews: BREAKING: Obama sends Congress $3.9 trillion 2015 fiscal budget
— Jerry Khachoyan (@TheArmoTrader) March 4, 2014
In comparison, Reagan’s 1st year, the budget was $678B. By his comparative 6th year (1987),spending was up 47% (1T) vs Obama’s proposed 11%.
— Jerry Khachoyan (@TheArmoTrader) March 4, 2014
Now THIS Is Resistance
Posted by TheArmoTrader on February 23rd, 2014 at 10:33 pm
The Stock Market is sitting right below all-time highs. However, year-to-date, stocks are pretty much flat with the S&P 500 sitting at a -0.2% return.
Stocks Keep On Trucking
Posted by TheArmoTrader on February 18th, 2014 at 1:01 am
It’s should be no surprise to anyone that the stock market has done pretty well over the past two years. But the way it’s moved […]
Rooting For A Choppy January
Posted by TheArmoTrader on January 23rd, 2014 at 1:07 am
So far, the start of this year has been pretty dull for the bulls. We’ve seen no (sizable) sell-off, so there’s been no juicy “buying the dip” opportunity, and there’s been no ‘start of the year’ rally.
Is Gold About To Move Higher?
Posted by TheArmoTrader on January 13th, 2014 at 1:25 am
Gold had a terrible year in 2013. In fact, it was the 1st time Gold had a down year since 2000 and in fact had its worst year in nearly 3 decades.
Predictions for 2014
Posted by TheArmoTrader on January 1st, 2014 at 8:26 pm
Here are my 2014 Predictions!
The Best & Worst Performing Industries of 2013
Posted by TheArmoTrader on December 31st, 2013 at 1:55 am
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The 2013 Chart Of The Year
Posted by TheArmoTrader on December 30th, 2013 at 1:29 am
There has been a couple of posts over the previous few weeks that have highlighted the “charts/graphs of the year”. There are a lot of noteworthy/good charts in there, but I think there is one chart – the true 2013 chart of the year- that’s missing.
Will 2014 Mark the Return of Market Volatility?
Posted by Jake Huska on December 16th, 2013 at 11:15 pm
If there is one thing that can be said about 2013 in the market is that it was anything but volatile, relatively speaking.
A Bearish Pattern For Bitcoin?
Posted by TheArmoTrader on December 14th, 2013 at 10:34 pm
Bitcoin, the virtual cryptocurrency, has had an amazing run this year. However, over the past two weeks, the volatility has picked up and the run has slowed.
Jerry Khachoyan is currently an undergraduate student at UCLA pursuing a degree in Political Science. He started trading in September of 2008. He concentrates on using technical analysis and reading the tape to enter the best risk/reward trades. The stock market to him is one of the greatest inventions by man.
- No, Government Spending Is Not Exploding
- Now THIS Is Resistance
- Stocks Keep On Trucking
- Rooting For A Choppy January
- Is Gold About To Move Higher?
- Predictions for 2014
- The Best & Worst Performing Industries of 2013
- The 2013 Chart Of The Year
- Will 2014 Mark the Return of Market Volatility?
- A Bearish Pattern For Bitcoin?
- This Chart Nearly Disproves The Myth Surrounding Unemployment Insurance
- A Modest Proposal For The Minimum Wage Debate
- What Exactly Is Economic Growth?
- Bonds Are Hanging On For Dear Life
- Should Bill Ackman Buy Back Into JCPenney?