Raise the Hammer

Geoff, just to be clear, my numbers reflect total government(Federal, State, and Local) revenue and expenditure figures.

Considering that at the time, State and Local accounted for the bulk of the spending, if you forgot to include them in your calculations,
your numbers could be a bit off.

I made this mistake the first time I looked at the numbers.

In 1929, "current expenditures" by all levels of government were 8 billion dollars. Gross government investment was 2.8 billion dollars while 1 billion was written off for depreciation. This comes out to 9.8 billion dollars spent, out of an economy of 103.6 billion dollars. This works out to 9.46% of the economy.

Since military spending is usually not considered as being helpful for the average citizen, I make this distinction when referring to "social spending". If you disagree with me on this point, I will try to show you why i feel this is relevant , especially during WWII.

The rest of my figures were calculated in the same way I described above.

My figures show that non military spending (as a percentage of the economy) in the years beginning in 1929 were as follows: 8.59, 10.75, 14.38, 15.67, 16.49.

Furthermore, from 1934 to 1939, non military spending was: 17.42, 16.23, 17.3, 14.36, 16.96 and 17.25 % of GDP.

Therefore, this period, from 1934 to 1939 was not a time of great spending expansion. Curiously enough, however, during this same time period, the economy took off. Averaging over 5% real GDP growth per year.

That is why I am confused at the impression in society that the GD lasted until WWII.

That is why I say that non military spending ( as a percentage of the economy) caused, or as you more accurately put it, was strongly linked with the shrinking economy.

This correlation between non military spending and the economy can also be seen in almost every recession since the GD. I also refer to it to explain the difference in the Clinton economy and the GW Bush economy.

However, you are correct Geoff, I can't prove that non military spending causes the economy to tank, but I truly think the evidence is as strong as any other theory I have heard put forward.