Fiscal austerity explains the slow recovery: Change in per capita government spending over past six business cycles

 Quarters before and after recession’s trough (trough = 0) 1975q1 1980q3 1982q4 1991q1 2001q4 2009q2
-6 90.83817
-5 94.14608 96.46779 91.33168
-4 95.58078 96.72548 97.80345
-3 96.75442 96.51523 96.35624 94.05089
-2 97.19567 99.12375 97.21731 98.09825 98.14218 94.4813
-1 97.81814 98.81721 98.26435 98.92533 97.98324 96.68474
0 100 100 100 100 100 100
1 101.4549 99.26806 100.3829 100.7468 101.5275 99.84022
2 102.2914 99.73443 100.9558 100.4456 102.3723 99.50632
3 102.7309 99.32341 101.005 100.9653 102.8023 100.7222
4 103.1591 99.98405  99.79553 102.3054 103.3013 101.0192
5 101.5995 100.4771 102.4831 103.1351 101.1242
6 101.6376 101.715 102.7714 104.3665 100.3429
7 101.3162 102.037 102.2554 104.5556 98.8815
8 101.6571 103.485 101.9195 104.6451 98.15728
9 101.7618 104.602 101.724 105.4192 97.23711
10 101.9609 106.0107 102.011 105.8382 96.8626
11 101.5335 107.6073 101.868 105.804 95.92456
12 101.3926 107.6288 101.2959 105.4445 95.78462
13 102.7633 108.7749 101.4328 106.1767 95.40432
14 103.7289 110.4932 102.1325 106.3521 94.83228
15 103.9792 112.3029 101.9209 106.5289 94.20283
16 103.0743 111.6476 102.6275 106.0185 93.88481
17 103.3799 112.0741 102.8173 107.5423 93.60793
18 104.385 112.6221 102.3836 107.6773 93.04602
19 104.6642 112.3952 101.1486 107.8776 93.22673
20 105.8042  113.0807 101.9359 108.2144 93.61573
21 113.3476 103.2437 109.1187 94.26683
22 113.3408 102.7047 109.0787 94.17814
23 113.108 102.7598 109.5846 95.13453
24 114.405 103.1194 109.8789 95.48556
25 114.9973 103.4402 95.77813

Note: For total government spending, we deflated government consumption and investment expenditures with the NIPA price deflator. Government transfer payments were deflated with the price deflator for personal consumption expenditures. This figure includes state and local government spending. We agree that it is appropriate to include this spending in a measure of the federal government's failure to combat austerity in the current recovery. Only the federal government has the significant ability to run deficits during recessions, and historically many federal efforts to combat recessions and spur recovery have involved giving aid to state and local governments to spend.

Source: Author’s analysis of data from Tables 1.1.4, 3.1, and 3.9.4 from the National Income and Product Accounts (NIPA) of the Bureau of Economic Analysis (BEA)

View the underlying data on epi.org.