The fiscal boost during the latest expansion has been extraordinarily weak: Average annual fiscal impulse over five business cycles
| Peak-to-peak | 3 years from trough | |
|---|---|---|
| 1960s | 0.817810% | 0.981295% |
| 1980s | 0.456157 | 0.532855 |
| 1990s | -0.107879 | 0.480713 |
| 2000s | 0.772504 | 1.156552 |
| 2010s | 0.393282 | 0.074817 |
Note: For each fiscal component (taxes, transfers, and government consumption and investment), the quarterly growth rate is multiplied by its share relative to overall GDP to get a quarterly contribution to growth. For taxes, this calculation is then multiplied by negative one—highlighting that tax cuts boost spending while tax increases slow spending. The figure shows these quarterly contributions expressed as annualized rates. Government consumption and investment spending is adjusted for inflation with the component-specific price deflator available in the NIPA data. For taxes and transfers, the price deflator for personal consumption expenditures (PCE) is used.
Source: EPI analysis of data from Tables 1.1.4, 2.1, 3.1, and 3.9.4 from the National Income and Product Accounts (NIPA) of the Bureau of Economic Analysis (BEA).