Scott Grannis, who goes by the pseudonym of Califia Beach Pundit, posted these charts at Seeking Alpha. Until 2007, he was Chief Economist at Western Asset Management Company, a California-based manager of fixed-income funds for institutional investors. You may learn more about Mr. Grannis at http://seekingalpha.com/author/calafia-beach-pundit .
These two charts highlight dramatic changes in US Government expenditures and revenues. The federal deficit in the 12 months ending August 2009 was just over $1.5 trillion, or about 10.5% of gross development product (GDP). As Mr. Grannis points out, the major causes of deficits in the past have been collapsing revenues. Since mid 2008, a combination of collapsing revenues and soaring expenditures are driving the Federal deficit to levels not seen since World War II when the deficit reached a historic high of 28.05% of GDP in 1943.
The good news is that, as of September 2009, the three three month annual rate of spending is down to 11% from a high of 28% a few months earlier. However, Federal spending continues to rise and a good portion of the $787 billion stimulus spending package remains to be spent.
