An Analysis Of Government Spending During The Recession

This article (via Mark Thoma) provides some interesting data from a recent study by the Federal Reserve Bank of Cleveland. It shows that total government spending on goods and services, that are a part to GDP, is lower than it was in the 1970's. That is primarily due to the effect of the recession on state and local spending. Government transfer payments have risen by over 4% as a result of the recession. They are not used in the calculation of GDP.  They contribute to consumer spending, however, which would have been lower in the absence of transfer payments. The increase in transfer payments, due to the recession, is close to the share of government spending on defense.