Government consumption and investment

Government consumption and investment is projected to reach $3,941.8 billion in 2024, representing a 3.4% increase from the previous year. This growth reflects continued public investment in infrastructure modernization, defense capabilities and social programs amid ongoing economic recovery efforts. Federal spending has been supported by bipartisan infrastructure legislation and defense appropriations, while state and local governments have benefited from improved fiscal positions and federal assistance programs. Rising costs for government services and employee compensation have also contributed to nominal spending increases.

Government consumption and investment has shown resilience over the past five years, growing from $3,721.8 billion in 2020 to $3,941.8 billion in 2024. The period was marked by significant fiscal response to the pandemic, with spending surging 3.4% in 2020 as governments implemented emergency health measures, unemployment assistance and economic stabilization programs. This represented the largest year-over-year increase in the dataset, reflecting unprecedented federal intervention in the economy.

The subsequent years showed a pattern of normalization, with spending declining in 2021 and 2022 as emergency pandemic programs wound down and fiscal consolidation efforts took effect. Government spending reached $3,669.9 billion in 2022, marking the lowest level since the initial pandemic response. However, 2023 saw renewed growth as infrastructure investments gained momentum and defense spending increased amid geopolitical tensions.

The period highlighted the counter-cyclical nature of government spending, with public investment serving as an economic stabilizer during the recession and recovery phases. Infrastructure modernization became a key priority, with significant allocations for transportation, broadband expansion and clean energy projects. Defense spending also increased throughout the period, driven by modernization programs and emerging security challenges.