Friday, February 15, 2013

The contraction in State and Local spending

I'm getting a little bit tired of reading about the state and local government contraction.  So I decided to look it up.  Here's the graph

So state and local governments are contracting by spending more.  It does make you wonder why people post things without looking at the data first.

There's no doubt that state and local government employment is down through the recession.  But spending is not down.  So that tells you that state and local governments prioritized other things over employment.  That may or may not be a bad thing but it's certainly not a contraction, at least as it is defined in the economic literature.

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