Watching the Economy by Clint Burdett CMC® FIMC

November 6, 2013

Government Investment Relative to GDP

A long term driver of economic growth is capital improvements.

Is the decline in gross government investment one party's fault as suggested by The Huffington Post in "How Republicans Have Trashed The Economy, In 1 Chart"?

I am going to re-examine the HuffPo chart. It demonstrates that Government is decreasing its contributioin to capital investment relative to GDP, trending down since 1961.

Using Data Series A782RC1Q027SBEA (quarterly SAAR) and nominal GDP in dollars from the St. Louis Fed FRED, first here is the same chart.

Here is the formula Gross Government Investment/Nominal GDP *100 from the last chart, presenting the denominator and numerator data separately as billions of dollars.

It would be difficult to blame one party for reduced government investment compared to GDP since since the early 1960s that investment has not kept up with GDP growth.