Worst Socialist Ever part MMMCDLXIII*
I just notice that in the second quarter of 2015 US real gross private domestic investment surpassed US real government consumption expenditures & gross investment for the first time since the data have been collected (1947).
The long era of US socialism as lead by Eisenhower, Nixon, Reagan and the Bushs has ended under raging capitalist Barack Obama (and the insane Republican posse in congress and the 50 little Hoovers).
I think this is relevant to the debate about secular stagnation. It isn’t so clear to me that the US economy needs bubbles to achieve full employment with positive interest rates. I think it might be enough to end the extraordinary austerity.
update 1: Latin numbering corrected in title thanks to Warren in comments.
update 2: more importantly JW Mason argues convincingly that I should have looked at nominal private investment and nominal government consumption plus investment. That measures how much the two cost us. He argues that comparing real this and real that is a mistake as the difference depends on the base year. This is very important because the investment deflator has been falling like a rock (mostly computers and such getting cheaper). Now real vs real comparisons with different price indices (which grow at different rates) are very common — there is a huge literature on PPP corrected GDP and its growth in different countries.
Here is the nominal graph 
As JW Mason noted, it looks very different — the strikign feature is how coincidentally similar the two flows happen to be.
On the other hand and in my defence, I note the striking pattern during the Obama presidency
The almost complete absence of growth of nominal government consumption plus investment is extraordinary (and has been noted again and again).
To be clear, I was being facetious, Obama isn’t a socialist and he isn’t the worst moderate progressive ever — he’s just president and has to deal with Congress over the Federal budget (with avoiding default a principal goal) and has little influence over state and local budgets.
Wouldn’t that be MMCDLXIII?
Missed an M — 3M’s.
“The long era of US socialism as lead by Eisenhower, Nixon, Reagan and the Bushs has ended”
… Are you being facetious?
“raging capitalist Barack Obama”
!?!?
Oh Robert! ” I think it might be enough to end the extraordinary austerity.” Think so?
I see that some people can’t chuckle easily as I.
Dude, you are comparing two index numbers. You can’t do that!
As of 2015Q2, gross private investment was a hair under $3 trillion. Government consumption and investment, $3.2 trillion. 3.2 is greater than 3. To find a point at which private investment was greater than government spending, you have to go all the way back to … 2006Q2.
Look, you’re a smart guy, you know that investment and GDP are converted to “real” values using **different deflators**. This means that comparison of real values will depend entirely on which year you choose as a base year. Use 2014 instead of 2009, and you get the current nominal values — 3.2 trillion GDP, 3 trillion private investment. Use, let’s say, 1950, and you get private investment nearly triple government. It’s completely arbitrary — you’re comparing two index numbers. It is exactly like saying that your height in centimeters is greater than your weight in pounds, so you must be super svelte.
What is it with economists and “real” numbers?
(Of course where I wrote “GDP” I meant “G”. Point unaffected.)
If you look at dollar values, as you must to make this kind of comparison, the facts are almost the opposite of what you claim. Altho government consumption and investment has seen the slowest ever growth under Obama — essentially flat — the collapse in private investment spending after 2008 was even more unprecedented. So this is actually the first expansion since the 1970s in which private investment has NOT surpassed government consumption and investment.
OK you have a point. I don’t really know how to deal with the decline in the investment deflator (based on computers and such getting cheaper).
The graph assumes that we are relatively familiar with 2009 prices and so have a sense of what real (2009 base year) means.
It’s true it is easier to fit (nominal I) / (nominal GDP) than (real I )/ (real GDP). I think this is interesting as it fits invest if you have spare money not invest if returns are really over some required threshold.
But that is blah blah unrigorous pseudo theory. I agree with your point and accept your criticism.
Why not share for NGDP, which I don’t have handy, but believe government investment is still declining as share of NGDP.
Robert – Thanks for the gracious response.
Matt – That’s right, there has been a fall in nominal G/NGDP. But there has been an even bigger fall in nominal I/NGDP. 30 years ago, both were around 0.2. Now G is around 0.18 and I is around 0.16.
https://research.stlouisfed.org/fred2/graph/?g=2oYH
JW yes thanks, that is what I thought I saw in some charts. Here is another gross government investment as a share of NGDP. Hope chart works posting from phone.
https://research.stlouisfed.org/fred2/graph/?g=2pd6