The Government Investment Drought Continues…..

Sometimes things are not what we think they are. The conventional notion is that government has become more important under President Obama, while the private sector has stagnated. Yet in some ways the data tell a different story. Take a look at this chart.

The top (blue) line shows that private nonresidential investment has rebounded smartly since early 2009, when President Obama took office. Residential investment first dropped, and then mostly came back.

The real problem is government investment, which is down 8.3% since the first quarter of 2009, and still falling. In other words, government spending on infrastructure infrastructure, building, and equipment is declining, adjusted for prices changes.

This is just utterly bizarre. In a time when the economy is still sluggish, government investment should be the simplest thing to pump up. We need to modernize our infrastructure and bring government into the 21st century, and it’s just not happening.

Here’s another angle. This chart shows net government investment as a share of GDP.

According to this chart, net government investment is the smallest share of GDP in more than 40 years, and dropping.

Comments

  1. M Trillo says:

    Hard to invest in infrastructure when you have so many union pensions to take care of.

  2. Is government investment the total from federal, state and local governments? Or is it just federal?

Trackbacks

  1. [...] The government investment drought continues.  (Mandel on Innovation and Growth) [...]

  2. [...] And adding a late entrant, H/T to Abnormal Returns: The Government Investment Drought [...]

  3. [...] The Government Investment Drought Continues….. – Michael Mandel [...]

  4. [...] The Government Investment Drought Continues….. – Michael Mandel [...]

  5. [...] –Government Investment: Mike Mandel sees a drought in supervision investment. “The genuine problem is supervision investment, that is down 8.3% given a initial entertain of 2009, and still falling. In other words, supervision spending on infrastructure infrastructure, building, and apparatus is declining, practiced for prices changes. This is only definitely bizarre. In a time when a economy is still sluggish, supervision investment should be a simplest thing to……Read the Full Article at: http://blogs.wsj.com/economics/2012/04/30/secondary-sources-government-investment-policy-uncertainty-falling-oil/?mod=google_news_blog [...]

  6. [...] private sector has stagnated.  Yet in some ways the data tell a different story."  Click here to read the [...]

  7. [...] –Government Investment: Mike Mandel sees a drought in government investment. “The real problem is government investment, which is down 8.3% since the first quarter of 2009, and still falling. In other words, government spending on infrastructure infrastructure, building, and equipment is declining, adjusted for prices changes. This is just utterly bizarre. In a time when the economy is still sluggish, government investment should be the simplest thing to pump up. We need to modernize our infrastructure and bring government into the 21st century, and it’s just not happening… According to this chart, net government investment is the smallest share of GDP in more than 40 years, and dropping.” [...]

  8. [...] Institute recently pointed out that government investment has dropped over 8 percent since 2009, and is still falling. As this chart shows, private non-residential investment has been growing, while residential [...]

  9. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  10. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  11. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  12. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  13. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  14. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

  15. […] and the policies that spawned it faded from our favor. We allowed labor laws to go unenforced, public investment to decline, and the minimum wage to stagnate even as the cost of living soared. We deregulated […]

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