The decline in public investment at the state and local levels

by on May 8, 2013 at 7:04 am in Current Affairs, Data Source | Permalink

Matt Yglesias has the scoop, and here is his chart:

investmentdecline

You can think of that as another way of viewing the lost economic decade of the oughties.

Rich Berger May 8, 2013 at 7:31 am

Maybe I’m missing something, but it doesn’t look like a decline and it is in constant dollars.

mavery May 8, 2013 at 7:52 am

Do you realize how much the economy has grown since 2000? Having a flat level of investment over that time frame IS a decline.

Justin May 8, 2013 at 8:23 am

It is a decline, but 2000 is a year of horribly ‘exaggerated’ GDP. We could still be above the optimal trend line in investment. An 8% decline is huge but it’s also small compared to YOY declines in spending in programs within multibillion dollar revenue companies. You can understand how this implies that government spending is sticky in the same way wages are.

mofo. May 8, 2013 at 8:27 am

So we are pretty much going to be Somalia then?

JWatts May 8, 2013 at 9:38 am

No, more like France.

Michael May 9, 2013 at 8:10 am

I agree. Here’s the state and local line as a percent of GDP:

http://research.stlouisfed.org/fredgraph.png?g=ign

Rich Berger May 8, 2013 at 9:25 am

This chart does not agree with the headline (even leaving aside the fact that expenditure and investment are commingled). If his point was that investment had declined, he should have provided some support for that. It baffles me that Tyler (a very sharp fellow) sees MY and EK posts as having some value.

ElamBend May 8, 2013 at 10:04 am

I think Tyler is being clever with the headline

Mike May 8, 2013 at 10:20 am

That was my take too. At first I was thinking there was no decline, but then I realized that was the point.

Rich Berger May 8, 2013 at 10:43 am

I didn’t think of that. So Tyler is goofing on Mr. Church?

Ryan May 8, 2013 at 5:34 pm

The oughties gave it away.

Andrew' May 8, 2013 at 7:50 am

“Consumption expenditures AND Gross investment” sounds like taking a minus and adding it to a plus.

It’s interesting that the inflection points begin after the recessions.

Andrew' May 8, 2013 at 8:01 am

Ha! I was going to make some joke about Federal investment being zero by definition. Then I noticed it IS zero.

Bob Knaus May 8, 2013 at 7:53 am

MY makes the excellent point that state and local governments are a bigger driver of investment than the federal government. Unfortunately the series in his graph are apples and oranges. SLCEC96 includes both consumption expenditure and investment. NDGIC96 is investment only. This is plainly stated in the titles for the series. You can look up details here: http://www.bea.gov/national/pdf/nipaguid.pdf

Justin May 8, 2013 at 8:24 am

Thanks, good points.

charlie May 8, 2013 at 9:32 am

This is what happens when you let philosophers write about economy.

Asking economists to write about philosophy is marginally more dangerous.

Michael May 9, 2013 at 8:16 am

Here it is using a more apples-to-apples comparison with real gross investment for both:

http://research.stlouisfed.org/fredgraph.png?g=igp

Frederick Harrison May 8, 2013 at 7:57 am

It seems to me that mere local politicians are seriously out of their depth when dealing with these faceless international “bankocrats”. Politicians come from all walks of life and would be unlikely to pass a job interview for most jobs. How many of them are qualified as economists or international lawyers or sociolologists? (In countries which have constitutions, very few of them have actually read it. And most of them spend more time in the make-up department of the television studio than anywhere else!) Yet we happily hand over the reins to them to take big decisions in these fields every day. It’s becoming clear that politicians and administrators should look elsewhere to make up for the competencies they lack. They should turn to professional economic crisis specialists, as already happens in the US. For example, the Orlando Bisegna Index, specialists in the economic crisis, apart from measuring the intensity of the econonomic crisis in many countries, have helped various counties with debt problems, business failures and unemployment, thus improving the economic condition of many families…

PseudoRegister May 8, 2013 at 10:44 pm

I suspect most politicians are qualified to be sociologists.

Matt May 9, 2013 at 10:26 am

This is here nor there, but just want to point out that that exact same comment appears on 3 other blogs posts elsewhere on the web. Keith Humphrey recently made a point about “spray-paint” comments over at samefacts.org and for some reason I decided to google the above comment, and there you go.

https://www.google.com/search?q=It+seems+to+me+that+mere+local+politicians+are+seriously+out+of+their+depth+when+dealing+with+these+faceless+international+%E2%80%9Cbankocrats%E2%80%9D.&aq=f&oq=It+seems+to+me+that+mere+local+politicians+are+seriously+out+of+their+depth+when+dealing+with+these+faceless+international+%E2%80%9Cbankocrats%E2%80%9D.&aqs=chrome.0.57&sourceid=chrome&ie=UTF-8

8 May 8, 2013 at 8:29 am

Government employees have captured the local governments. Many small towns have seen their workforce unionize. Many, many local governments, particularly in blue states, have absolutely unsustainable finances. If they were a company you would be looking for the moment to buy puts and short them. Labor has grown to consume the investment portion of the budget. I speak from first hand experience having served in a financial capacity for local government. Every year the pension, healthcare and salary costs chew up more of the budget, and there is less and less money to fix potholes and do basic building maintenance and capital investment. Major capital projects were delayed all through the 2000s, with major costs building up and potentially hitting crisis levels if something ever breaks.

Michael May 9, 2013 at 8:50 am

One way to reconcile what you’re saying to what’s seen in the blue line above is to say that the amount of money being spent is roughly the same as 10 years ago. Of course, during that decade many things cost more (in real terms), especially things like healthcare. So, if the overall amount of funds isn’t increasing, but something like health care costs are definitely increasing, then something has to get pushed out of the budget. That, or you’ll have to spend more.

Claudia May 8, 2013 at 8:39 am

Not to be grumpy, but this post and the original one exemplify the reason why economic writers are so frustrating … slap some lines downs (one of the more fugly FRED charts I have seen on a blog in a while) and then start making big statements. I agree with Yglesia’s point that the spending and investment of state and local government is given too little attention. Maybe site some of the thoughtful research on how S&L are different in their revenue streams (there’s a reason not a huge pick up in spending in the 2000s)? Or how about the research showing the effects of the S&L stimulus…it is some of the most promising in this cycle. Don’t put up some apples and oranges lines with no real discussion.

Two substantive points: 1) these two line are not completely independent (national politics have spillovers), so I doubt we want to shift too much focus off the federal line…the federal changes might tell us something about S&L changes that are in train. 2) small sectors in levels can still be very important for trends/cycles: motor vehicles is less than 5 percent of personal consumption expenditures but it is about a quarter of variation in PCE growth. some of that is noisy in timing, but it also shows turning points more noticeably and quickly than other spending sectors.

To recap: I agree, think more about S&L. I agree the 2000s need more study … please, please make a better graph next time.

Rahul May 9, 2013 at 12:44 am

please, please make a better graph next time.

Why don’t you give it a shot and post one? Not trying to be gratuitously sarcastic but frankly I’m confused as to what’s wrong with the current graph?

Dangerman May 8, 2013 at 8:50 am

Sarcasm?

Jack P. May 8, 2013 at 8:58 am

It should be mandatory for economic journalists to read Andrew Gelman’s blog to learn about making better graphs and figures.

The FRED data is free, so you can download it and make your own, better graph.

The other issue: ”Collapse”? I think Yglesias needs to go back to a dictionary.

Ted Craig May 8, 2013 at 9:37 am

Tyler is a hobbyist, not a journalist. He’s doing you a favor by providing the information he does. You want better charts, pay for them.

Michael May 9, 2013 at 9:01 am

It’s just very easy to create and link to a graph from FRED. For a blog post that’ll likely be all but forgotten in a few days, I can’t blame people for using FRED. Making a prettier graph isn’t hard, but it’ll take way more than the 60 seconds it takes to do it with FRED.

Yancey Ward May 8, 2013 at 10:15 am

Well, obviously it is falling because states and localities have been savagely cutting tax rates everywhere.

Adam May 8, 2013 at 11:50 am

And another drag on growth in the next decade.

Michael May 8, 2013 at 11:59 am

Can we please stop using the word “investment”? Spending is what is down.

And, can we stop pretending that spending is the same thing as achieving benefits? Show me numbers that test scores are declining, or crime is up, or communicable diseases from inadequate water supplies and sanitation is up, and I’ll pay attention.

I’m in the private sector, and if our business is reducing how much it is spending, frequently that is a good thing.

JoeDog May 8, 2013 at 4:34 pm

Investment would be my preferred word for spending on infrastructure. And when we’re all stuck in congestion because investment is down, that’s a bad thing.

Doug M May 8, 2013 at 6:00 pm

If we are talking about declining state and local investment spending, then why is the chart investment and consumption?

If we looked at state and local gross investement we would see that it is about 10% of private investment.

marmico May 8, 2013 at 7:45 pm

Real state and local government gross investment is at 1999 levels. Net investment, after consumption of fixed capital, must be getting quite low in historical terms.

[主页] May 9, 2013 at 2:07 pm

Hi there just wanted to give you a quick heads up and let you know a few of the pictures aren’t loading correctly. I’m not sure why but I think its a linking issue.

I’ve tried it in two different internet browsers and both show the same outcome.

best deal on loans May 9, 2013 at 2:28 pm

I’m not meaning to be a ballbreaker, but I just think you can write better content than this. More detail would be good.

http://quickloansbadcreditonlineinstantcashqf.co.uk May 10, 2013 at 7:29 am

This is the right web site for anyone who would like to understand this topic.
You understand a whole lot its almost hard to argue with you (not
that I really would want to…HaHa). You certainly put a brand new spin on a topic that’s been written about for a long time. Wonderful stuff, just great!

Patrick McCann May 10, 2013 at 9:48 am

Much of the discussion above assumes the chart is in nominal dollars. Yglesias says it is inflation adjusted in his post.

Mabel May 10, 2013 at 6:48 pm

I get pleasure from, result in I discovered just what I used to be looking for.
You’ve ended my 4 day lengthy hunt! God Bless you man. Have a great day. Bye

Tomoko May 10, 2013 at 8:19 pm

Webcams can do a lot of things, such as video conferencing, virtual advertising, workplace or home surveillance, event
broadcast, and many other functions. I haven’t really owned the mouse long enough to test the battery life, but Logitech claims it can run for up to two years on a single pair of batteries, and several other reviews I’ve
found online attest to that fact. Another great aspect of this remote is that it comes with a recharging dock.

Breaking news May 10, 2013 at 9:28 pm

Pretty! This has been an extremely wonderful post.
Thanks for supplying this info.

Shane May 11, 2013 at 12:58 am

It is truly a nice and helpful piece of information.
I’m satisfied that you just shared this helpful
info with us. Please stay us informed like this. Thanks for sharing.

World of Warcraft Level Guide May 11, 2013 at 3:45 am

Its like you learn my thoughts! You appear to grasp
a lot approximately this, such as you wrote the e book in it or something.
I believe that you could do with a few percent to power the message house a bit,
but other than that, this is fantastic blog. A fantastic read.

I’ll certainly be back.

cleaning services companies Longford May 11, 2013 at 5:17 am

Great beat ! I would like to apprentice at the same
time as you amend your site, how can i subscribe for a blog
website? The account aided me a acceptable deal. I have been a little
bit acquainted of this your broadcast offered bright transparent concept

https://su2008.czu.cz May 15, 2013 at 8:04 pm

I leave a response whenever I like a post on a site or if I have something
to add to the conversation. Usually it’s a result of the passion displayed in the article I read. And after this article The decline in public investment at the state and local levels. I was moved enough to post a comment ;-) I actually do have a couple of questions for you if you do not mind. Could it be simply me or do a few of these remarks look like they are written by brain dead individuals? :-P And, if you are writing at other places, I would like to follow you. Would you list every one of your public sites like your Facebook page, twitter feed, or linkedin profile?

cleaning cheltenham May 23, 2013 at 2:49 pm

Additionally, we will offer up some selection tips in
order to give you the best chance at making a
great choice and establishing a strong working relationship with your commercial cleaning service provider.
You will also be able to typically obtain a better deal if you utilize House Cleaning service providers at a regular interval.
And last, but far not least is my favourite method, the steam cleaning.

cleaners cheltenham news May 26, 2013 at 2:39 pm

If some one needs expert view concerning blogging and site-building then i suggest him/her to pay a quick visit this
blog, Keep up the fastidious work.

Comments on this entry are closed.

Previous post:

Next post: