Government Spending Does Not Add Up

Cyberspace is full of data. Some of the data can be correlated across various sources with different interests, some of the data comes from one source but can be correlated within the data itself, and some of the data is on USA government income and spending. This data currently is not adding up.

One can always find reasons for short term deviations in accounting data. But USA Treasury data has periodic deviations built in. Take something simple like government revenue (which includes social security contributions) and expenditures.

Figure 1: Federal Government Receipts (red line) vs Expenditures (blue line)

Just a note that the above graph is current through 1Q2013 – but the FRED computer generates quarterly data plots looking like the data was current only through 4Q2012. While at it, I am also disappointed with FRED plots because they do not allow creation of moving averages which would allow a better visualization of trends on noisy data series.

Having said this, the massive amount of data available in one place – and the ability to compare and automate this data using a variety of tools based into the FRED software – makes FRED one of the most important economic data resources on the internet.

But FRED does not create data, it reports data given to it by various government and private organizations. When you deal with spending data from Treasury, you might as well give up as the data never seems to add up. Take figure 1 above. If you subtract revenue from expenditures – logically this is debt which needs funding. Even in the private sector, the way accounting methods work, it would not add up exactly. But this is not a little difference – but a big difference.

Figure 2 – Difference between Government Expenditure and Receipts (blue line) and Growth of Federal Government Debt (red line)

Get The News You Want

Read market moving news with a personalized feed of stocks you care about.

Get The App

Hopefully a reader of this post can advise why figure 2 does not add up in the years since the Great Recession. It almost looks the the difference is the balance sheet of the Federal Reserve. I only point this out in passing because I am not an expert in treasury operations – and am really looking for an answer.

There have been several posts based on the monthly treasury statements which say that the government has run a surplus in three months recently. Can this be true? It is if you subscribe to the Bernie Madoff school of accounting. Consider that the government is at its debt ceiling and is undertaking Click here to view the scorecard table below with active hyperlinks

Written By: Econintersect LLC