Earlier this year, we posted a chart that illustrated the biggest single political issue of 2010, which revealed the near-complete disconnect that has developed since 2007 between the federal government's spending and the median income of American households. Today, we're going to take you deeper into that issue because rectifying that unsustainable situation will affect the lives of every single American.
We'll begin by revisiting a very slightly modified version of our "biggest issue" chart to give you a better idea of why we designed it to look the way it does.
As you can see, we've shown how the U.S. federal government's total spending has changed with respect to the level of the median U.S. household's income in every year from 1967 through 2009.
While the United States' historic federal expenditure data goes back to the nation's founding, the median household income data only goes back to 1967, which limited our ability to show the relationship between the two before that time. And then, the only reason we didn't go past 2009 is because the Census won't report the median household income for 2010 until October 2011! Not that we didn't take a stab at projecting what median household income will turn out to have been for 2010....
So that's why we indicated the future planned spending portion of the chart as horizontal lines - we won't be able to nail down exactly where the trajectory of total federal spending will be in the future until the U.S. Census gets around to releasing the data.
Political Calculations is a site that develops, applies and presents both established and cutting edge theory to the topics of investing, business and economics.
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