Goverment stewardship of US taxes

Government stewardship from 1947 to 2012

I’ve been looking at a lot of Bureau of Economic Analysis (BEA) data for a client lately, and for my own purposes started looking at longer term trends regarding what the US government gets up to with our money. Here is an interesting one: the chart above shows the ratio of what’s called Federal Consumption Expenditures & Gross Investment (FGCE)1 divided by Gross Domestic Product (GDP).

FGCE measures consumption expenditures and gross investment by the governĀ­ment and government enterprises. Consumption expenditures measures goods & services produced by the government, while gross investment measures purchases of structures and of equipment and software by the government. When I divide FGCE by GDP effectively I’m looking at the productivity and prudence of the government; how much is created and invested by the government as a function the total economic output of the United States (GDP). On some level this can be viewed as stewardship of the US government expressed in quantitative terms.

Unlike a lot of other studies on this blog I’m considering a long term view here, from January 1st 1947 to July 1st 2012. The chart is curious, showing that as World War II wound down the nation was investing at a rate of roughly 8% to 9% of GDP, presumably because wartime debts were being paid down. But something interesting happened in the 1950s, as the effectiveness of government with our money soared. And this prudence paid off, as living standards in The United States sharply increased. Over time however, we see that government stewardship has fallen, touching a low in 2000. Since that time we’ve seen modest increases, but nothing approaching the post WWII highs.

The chart below shows government stewardship broken down by decade, with a trend line fitted.

Average government stewardship by decade, 1947 to 2012

Average government stewardship by decade, 1947 to 2012



1 Bureau of Economic Analysis, 2012, ‘A guide to the NIPAs’, [online], last accessed 29/1/12, http://www.bea.gov/national/pdf/nipaguid.pdf

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