One way to determine the size of the U.S. federal government is to look at its expenditures. Of course, population and the economy have grown, so it’s a good idea to use a ratio to measure expenditures. For example, you can divide expenditures by GDP, and this is exactly what is shown here. (One detail to pay attention to: This graph uses nominal values—at current prices—for both series.) The graph shows the huge government buildup during WWII, almost doubling in 1942, and its equally impressive contraction thereafter. Since then, the size of the government has fluctuated between 17 percent and 23 percent of GDP, with another recent buildup that looks ready to melt away if the trend continues.
How this graph was created: Select the series “Federal Government Current Expenditures,” then add the series “Gross Domestic Product” to series 1. Apply data transformation “a/b” and then select graph type “bar” in the graph settings.
Suggested by Christian Zimmermann.
View on FRED, series used in this post: