rate of increase in Federal Budget vs CPI

I got the numbers for the Federal Budget from this wiki page:
http://en.wikipedia.org/wiki/United_States_federal_budget

and the Inflation rate from:
http://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx

An increase in Federal Budget at a faster than inflation rate can only mean that either the government is expanding, or the given inflation rate is not true or both

 

That's an ugly chart if the budget is a leading indicator for inflation. Which I agree is the case.

 

a) total consumption/investment = consumption/investment of government and the private sector
b) the correlation coefficient between the two time series is -0.02, i.e. they are statistically unrelated

 

I didn't say it's related or unrelated, this is all I said

"An increase in Federal Budget at a faster than inflation rate can only mean that either the government is expanding, or the given inflation rate is not true or both"

which stands true

what other meanings could a faster increase in federal budget vs inflation rate have?

if someone told you their total expenses were $40,000 in 2007 but they reached $50,000 in 2008, what would that say to you?

I'd say it is either due to inflation, purchase of additional products/services, an increase in the number of people the person supports and provides for (ie kids), or some combination of those three.

 

hmmm, when I calculated the correlation with acutal numbers instead of the percentage increase I got a coefficient of 0.98867.