rate of increase in Federal Budget vs CPI

Discussion in 'Economics' started by 426653478, May 3, 2009.

  1. That's an ugly chart if the budget is a leading indicator for inflation. Which I agree is the case.
  2. 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
  3. 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.
  4. bellman


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