Figure 1: Log ratio of real Federal government consumption and investment plus transfers to real GDP (blue), and ratio to potential real GDP (red). NBER defined recession dates shaded gray. Real transfers calculated by dividing line 22, BEA NIPA Table 3.2 by PCE deflator. Potential GDP is measured in Ch.05$, and adjusted to Ch.09$ compatible with the latest GDP release by taking the ratio of 2011 GDP reported in the June 2013 and November 2013 releases. Source: BEA, CBO (Budget and Economic Outlook, February 2013), NBER, and author’s calculations.
As a share of GDP, the current level is below that recorded in 1982Q4 (under President Reagan); as a share of potential GDP (guesstimated), the current level is below that recorded in 1986Q3 (under President Reagan).