After visualizing how U.S. GDP has evolved since the first quarter of 1947, both with and without the contribution of the federal government and also state and local governments, we couldn’t help but notice that the U.S. federal government’s contribution to GDP in recent years was far below the amount of money that it spends.

So today, we’re digging deeper into the data and going the extra mile to illustrate the amount of federal spending that actually ends up going to a productive end, as determined by the U.S. Bureau of Economic Analysis. Our first chart shows the U.S. government’s nominal total spending along with the nominal amount the BEA indicates contributes positively to the nation’s Gross Domestic Product.

In our next chart, we’ve calculated the percentage of GDP that is generated for every dollar of the U.S. federal government’s spending for each quarter from 1947-Q1 through 2016-Q1.

Over this period, we see that in the years immediately following World War 2, around 65% of the U.S. government’s spending added to the nation’s GDP. After briefly dipping in 1950, the U.S. government became a powerhouse contributor to the nation’s GDP in the 1950s, as it began rebuilding the U.S. military and launched the U.S. interstate highway system, where suddenly, as much as 97.3% of the U.S. government’s spending contributed to the nation’s productive output.

After that initial surge, the contribution of U.S. government spending to GDP began declining. Slowly at first, it declined steadily to 74.8% in 1967, after which it began to deteriorate much faster, plunging to 44.8% in 1975, as the U.S. government implemented the Medicare and Medicaid welfare programs. Although it leveled out somewhat after 1975, it continued declining until bottoming in 1981 at 42.8%.

From 1981 through 1988, federal government spending made a more positive contribution to the nation’s GDP, rising to 47.3%. This period coincides with a period in which the U.S. military was modernized and expanded.

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