Sunday, October 28, 2012

The Federal Budget as a Percent of GDP

Writes Eddy Elfenbein:
On Friday, the government released its first estimate of third-quarter GDP. This number will be updated a few more times as the government collects more data. 
There’s one over-looked fact of this report and it’s that we now know what the GDP was for the government’s fiscal year (which ends on September 30). For the 2012 fiscal year, nominal GDP was $15.54 trillion which was an increase of 4.1% over FY 2011. Again, this will be updated but we can safely assume that GDP will generally be in that vicinity. 
With nominal GDP under our belt, we now know what the government’s spending, revenue and deficit was as a percent of GDP. In FY 2012, the federal government spent 22.77% of GDP while it took in 15.76% of GDP. The deficit came to 7.01% of GDP.

1 comment:

  1. Sure, spending as a percentage of GDP shows what part the government plays in the economy.

    But deficits should be expressed as a percentage of cash flows (i.e., tax revenues) because that is their 'revenue' source. And THAT is a horrific percentage, not some measly 7%.