Less than two weeks before Americans head to the polls, the BEA has announced a 2% increase in real GDP growth. Of those two percent, government spending accounted for .71 percentage points. That’s the largest contribution to GDP since the 2009 stimulus funds were spent.
If you didn’t believe in election year stimulus before, perhaps a look at the chart below will put your doubts to rest. You can see the 2009 stimulus funds fading out on the left hand side of the chart, and then federal spending pulls back, becoming a drag on GDP, until the third quarter of 2012, just before the election. Was government spending from the second and fourth quarters shifted into the third quarter to generate a bounce in jobs and business? We’ll never know, but you can draw your own conclusions about what power Washington D.C. has over the GDP numbers.
