Government Spending Analysis

Growth Dragged Lower by Government Shutdown   This morning’s delayed 4Q2025 #GDP report was weaker than expected and, combined with slightly higher-than-expected December consumption deflator inflation, provides little cause for celebration in either the stock or bond markets.   Real GDP rose at an annual rate of 1.4% in the fourth quarter, compared to a consensus expectation of 3.0%.   While this is an unusually large miss, consensus expectations may have been biased up by the Atlanta Fed’s GDPNow model which, as recently as late January, had been estimating fourth-quarter growth of over 5%. However, this model is based on a mechanical extrapolation of monthly data as they come in the door, and reports earlier this week showing softer inventory growth and a much bigger trade deficit in December made a weak report much more likely.   Looking at the details, a very sharp 17% annualized decline in federal government spending was the main culprit for the weak report as real GDP, excluding the federal government rose by 2.7% annualized. The report noted that the federal government shutdown in October and the first half of November subtracted a full percentage point from real GDP growth. Other ongoing declines in federal employment presumably further dragged down the numbers.   Elsewhere in the report, consumer spending rose at a solid 2.4% pace and investment spending on equipment and intellectual property showed strong gains while spending on both commercial construction and home-building fell. The real trade deficit narrowed and inventories fell for the third consecutive quarter but neither of these sectors had much impact on growth.   Going forward, we expect first-quarter growth to be similarly weak, hurt, in part, by an unusually tough winter up and down the east coast and squeezed lower- and middle-income consumers. However, bumper income tax refunds and possible so-called “tariff rebate checks” should boost consumer spending and economic growth in general in the second and third quarters before moderating in the fourth. Overall, we expect fourth-quarter over fourth-quarter real economic growth of between 1.5% and 2.0% this year, down slightly from 2.2% in 2025. However, with consumption deflator inflation ending 2025 at 2.9% year-over-year compared to a 2.8% consensus expectation and the Fed’s 2.0% target, and with a still tight labor market, it is unlikely that the Fed will cut rates any time soon in response to sluggish numbers on real GDP.

Think federal government housing aid is focused on low-income families & largely funded by the Department of Housing & Urban Development? Think again. In new work at Urban Institute, Amanda Hermans, MPP and I provide a comprehensive account of the US government's many housing supports, which go far beyond HUD 🏘️ https://lnkd.in/eGekpAgM Our examination of federal housing supports shows how they are distributed through programs managed by HUD, the Treasury Department, the VA, Government-Sponsored Enterprises (like Fannie/Freddie), the USDA, and even DOT. We catalogue dozens of programs—showing which families they support & how much they cost. All-in-all, we estimate that the federal government spends ~$400 billion a year on housing-related expenditures, of which only about 1/4 is funded through HUD. Most housing spending goes through the tax code, and supports benefit homeowners & investors to a greater degree than low-income families. Because of the wide breadth of federal housing programs, they support tens of millions of households every year. Only about 5 million of those are supported by HUD—many other households are supported through low-interest loans & tax deductions. We have associated this investigation with a brand-new database of public data sources to understand housing assistance in more detail. We hope this can be a resource for folks to understand the federal government's full role in housing. Check out all the work here: https://lnkd.in/eGekpAgM

I analyzed US foreign assistance data for FY 25 and FY 26 YTD from usaspending.gov (directly sourced from Treasury) and below is a dashboard summary. Please note that the trend charts are in calendar years and cover the US FY 25 and 26 FY periods. I used usaspending.gov because foreignassistance.gov is usually delayed in updating and the website states that for most agencies, FY 25 data includes up to Q3. We already know that aggregate values are lower than in recent years. Other key findings: 1. Volatility across quarters: In both grants and contracts, there is volatility across quarters. 2. Multilaterals receive highest grant amounts: Despite the narrative that the US is abandoning multilateralism, this data suggests that multilaterals remain the primary implementing partners for US assistance. 3. Global health and humanitarian focus: The top 10 grants reflect a continued prioritization of global health and humanitarian assistance, in addition to economic growth (indicated by the IBRD allocation, which I believe was for Ukraine) 4. Democracy promotion is still in the mix: The obligation to NED occurred on the last day of FY 25 and is in the top 10 grant allocations. #ForeignPolicy #InternationalDevelopment #ForeignAid #Geopolitics #USAID #GlobalDevelopment

I analyzed every U.S. Department of Homeland Security contract award in FY25. 34,335 awards. $32.9 billion in total spend. Then I mapped where the money is actually flowing: • Which contracting offices are awarding • How much they’re spending • How many offers they’re seeing per award • And where competition is lower than most people expect One finding stands out: 71% of top-tier DHS spending averages fewer than 5 offers per solicitation. That’s not a saturated market. That’s opportunity — if you position early. In the attached report, I break down: • The top DHS buying offices and where they’re located • What those offices actually buy • Which offices combine high spend + manageable competition • Why serious DHS capture work starts by June, not September This is the same analysis framework we teach at GovClose — how to analyze federal spending, identify buyers early, and increase government contract wins without chasing RFPs. If you work in federal sales, consulting, or business development, follow me Richard C. Howard, Lt Col (Ret) here on LinkedIn. For those who want to learn how to do this analysis themselves, you can find Gov Close Certification Program through the link in my profile. — Richard C. Howard CEO, GovClose Lt Col (Ret), USAF

Over the past decade, government spending has surged, driven by pandemic relief, rising costs for entitlement programs and increased defense budgets. Let's take a look under the hood at where the money is going and where spending has grown the most since 2015. The U.S. government has been running budget deficits for nearly 25 years. That is due partly to a structural gap between tax collections and federal spending and partly to emergencies that prompted significant tax cuts and spending. Measured in unadjusted dollars, spending has jumped to nearly $6.8 trillion in fiscal year 2024 from about $3.7 trillion in 2015. Revenue rose, but not nearly as fast as spending. A straight count of dollars doesn't give an apples-to-apples comparison though. Growing population and recent inflation can skew the picture. Tax revenue per person dipped following the 2017 tax cuts, which lowered rates on individuals and on corporations. But tax collections jumped during the postpandemic recovery, especially as people sold stocks and cryptocurrency that soared in the asset boom of 2021. Meanwhile, federal spending has followed a more complex trajectory over the past decade. Congress pumped money into the economy during the pandemic to keep households, businesses and state governments afloat. Though those programs largely receded, long-run budget challenges remain because of growing interest costs and the aging population. Social Security benefits climb with inflation automatically. In addition, over time, a greater share of the population becomes eligible. As America ages, the number of beneficiaries, and the program's cost, grows. The fastest-growing big category, net interest, reflects the cost of past tax and spending decisions. The pandemic spending increased the overall debt. On top of that, a long period of low interest rates ended. Now, interest consumes a growing share of the budget. This category increased by +185% per person since FY 2015. The cost of Medicare, the health program largely for older people, is projected to grow in the years ahead as the population ages and healthcare gets more expensive. It increased by +15% in the past 10 years. National Defense, though a significant category increased by relatively low +7% from $2,453 to $2,623 per capita in budget spending. The other big way the government stepped into the economy during the pandemic was by propping up households. The income security category includes programs such as food stamps—and during the pandemic, the stimulus checks, expanded unemployment insurance and refundable child tax credit. However, comparing today with 2015, per person spending in constant dollars is actually down. #Economy

India Union Budget FY26 (3/3) Expenditure: Total expenditure likely to come in lower than BE in FY25 A Ministry-wise expenditure analysis shows that out of 55 Ministries, actual expenditure in FY25 could be lower than FY25BE for 42 Ministries while only 13 ministries could see actual expenditure in FY25 overshooting the Budget estimates. We expect large expenditure savings in Communication, Consumer Affairs, Defence, Finance, Jal Shakti, Road Transport, and Rural Development. On the other hand, Ministries of Chemicals and Fertilizers, Home Affairs, Railways and Health and Family Welfare could spend more than Budget estimate during the year. However, after incorporating the additional expenditure under supplementary demand (INR 44bn), we expect revex for FY25 to meet the budget estimate of INR 37.1tn. PLI allocation could remain muted amidst headwinds to global trade, rising protectionism. New PLI schemes could focus on employment-intensive sectors Employment generation to remain a focus area Capex: Roads ministry, capex loans to states could see higher allocation We expect large capex savings by ministries of communication (INR 400-500bn), defence (INR 300-400bn), finance (INR 500-600bn), and road transport (INR 300-400bn). On the other hand, some ministries could overspend their budget targets, railway ministry being a notable case (overspend of INR 100-200bn). Overall, we expect capex in FY25 to come in at INR 10tn, lower than the INR 11.11tn estimated in the budget. In FY26, we expect the government to peg capex at INR 11.5tn, a 15% increase over FY25 actuals. This would take capex to 3.2% of GDP, a tad higher than the level likely to be achieved in FY25 (3.1% of GDP). In line with past trend, three major areas viz. roads and highways, railway and defence are likely to receive lion’s share of the capex allocation. Government could target fiscal deficit at 4.5% of GDP in FY26; net and gross borrowing seen at INR 12.1tn and INR 14.8tn respectively In FY25, the government has estimated a fiscal deficit of 4.9% of GDP but current trends show that final print is likely to be lower than this at 4.8% of GDP despite nominal GDP growth lower than Budget estimate of 10.5%. In absolute terms, it implies fiscal deficit of INR 15.5tn. As against this, next year, government is likely to project a fiscal deficit of 4.5% of GDP and actual number could be even lower. However, given the economic slowdown, we believe government is likely to reduce the magnitude of fiscal consolidation this year to 0.3% of GDP. This implies a fiscal deficit of INR 16.1tn and net borrowing of INR 12.1tn and gross borrowing of INR 14.8tn. After this, it is very likely that the government moves to debt-to-GDP as an anchor of fiscal policy.

#thegreatreckoning. Today the U.S. national debt is over $35 trillion, representing $104,303 for every American citizen. The debt grows $4.5 million every minute. The interest alone costs $2.4 billion a day. If Elon Musk dumped his entire $200 billion+ fortune into it, it would cover the interest for only 83 days! The debt has dramatically increased under all our recent presidents, including Joe Biden. What did we spend all that money on, and how does it compare with previous administrations? Some of the factors that contribute to the national debt are wars, inflation, infrastructure, and expanding social services. Demographic factors, such as the aging of the large Baby Boom generation, which is supported by the smaller generations following it, also affect the solvency of programs like Social Security and Medicare. Among modern presidencies, Barack Obama added the most to the debt: $7.6 trillion. Second place goes to Donald Trump with a $6.7 trillion increase. Joe Biden takes the bronze third place medal for a $4.7 trillion deficit increase during his presidency. Deficits of trillions of dollars are terrifying, but the flip side of that is that the U.S. GDP itself has grown to $28.8 trillion. Some presidents have expanded the national debt by a greater percentage than others from the debt they inherited. Franklin D. Roosevelt added $178 billion to the national debt, but this was a 791% increase in the debt. Woodrow Wilson, Ronald Reagan, George W. Bush, Barack Obama, George H.W. Bush, and Richard Nixon all increased the deficit by a greater percentage than Donald Trump (who added $6.7 trillion, a 33.1% increase). After Trump, Jimmy Carter, Bill Clinton, and Theodore Roosevelt all added a higher percentage to the deficit than Biden. Biden's contribution was $4.7 trillion (a 16.7% increase). These are the policies President Biden and Congress have approved that increased the national debt the last 3 1/2 years. The American Rescue Plan Act ($2.1 trillion debt increase) – Support for small businesses, stimulus checks for individuals, lowering health insurance premiums, and increasing tax credit for children. 2022-23 Appropriations ($1.4 trillion debt increase) – budget areas such as national defense, education, federal salaries, etc. with a limit set by Congress. Student Debt Relief ($620 billion debt increase) – Lowering or eliminating student loan debt for some Americans, including those who enrolled in institutions that have failed accountability standards and returned low value for the tuition. The Honoring Our PACT Act ($520 billion debt increase) – health care and other services for veterans exposed to toxic substances during military service. The Bipartisan Infrastructure Law ($439 billion debt increase) – improving roads, bridges, railroads, public transportation, airports, and ports, modernizing the power grid, promoting clean energy, improving drinking water and wastewater services, and expanding access to broadband Internet.