Accounting says US growth will (finally) pick up!

Why? According to the “accountants”:

It’s no secret that spending cuts (and tax hikes) have retarded America’s growth for the past four years. But data from the Bureau of Economic Analysis suggests that the era of austerity may finally have ended.

The “flagship chart”:


At the end of the post we read:

A little more than half of the total decline in government spending since the middle of 2010 is due to military cutbacks, some of which obviously has to do with the withdrawals of US forces from Iraq and Afghanistan. Since the start of 2012, more than all of the decline in government spending can be attributed to reduced defence expenditures. For better or worse, this austerity also seems to have come to an end.

So while real nondefence spending is still about 5 per cent below its peak, real defence spending is about 12.6 per cent below its peak. Some of that is welcome, since it can be explained by the end of wars and recovery from the trough of the recession, but some of it represents a self-inflicted wound. The good news is that an increase in the military budget might actually be something the politicians can agree on.

I would say: to get the economy really “booming” let´s start a new war!

Interesting to note in the “flagship chart” above that from 2010 to mid-2011 “austerity was on the rise, declining since then and now it´s finito. However, both during the periods of rising and declining “austerity” real output growth chugged along at a very stable 2.2% growth rate!


I have a hard time figuring out why now, with “austerity” having ‘retired’, that would change!

2 thoughts on “Accounting says US growth will (finally) pick up!

  1. In the last US prez election (2012), I wondered if Mitt Romney won, if he would start a war, and then the tight-money crowd would forget everything, and say we must prevail and it is time to get America moving again.

    Romney did not win, so we never got a chance to find out if that was in the cards.

    I am pretty sure that if the GOP sweeps in 2016 we will again see large budget deficits, and perhaps less emphasis on tight money.

  2. Pingback: TheMoneyIllusion » Finally! Proof that the Keynesian model is true

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