US State Government Spending Since 1900

At the start of the 20th century state government spending was the smallest component of government, expending less than one percent of GDP each year. But state government spending has steadily increased throughout the 20th century. It went over 1 percent of GDP in the 1920s and exploded to 3 percent of GDP in the 1930s. In the 1950s state government began a steady growth, from 3 percent of GDP in the early 1950s to over 8 percent of GDP by 2000.

The 2000s saw another increase in state government spending to over 9.5 percent GDP when the Great Recession broke in 2008. In the 2010s state government spending has stabilized at around 9 percent of GDP.

Federal, State, Local Spending in 20th Century

At the start of the 20th century, government spending was principally local government spending. Out of a total of 7 percent of GDP, a full 4 percent was spent at the local level. Federal spending spiked in World War I, but in the 1920s, local government still represented about half of all government spending. In the 1930s this changed, and federal spending surged to about half of all government spending. After the spike of World War II the federal share increased again and state government spending also began to increase as a percent of GDP, so that by the mid 2010s federal spending checked in at over 20 percent of GDP, state spending amounted to about 9 percent of GDP and local spending was declining towards 9.5 percent of GDP.

State-by-State Comparison of State and Local Spending

The bubble chart shows total state and local spending for the latest year reported for each state in dollars per capita compared against the Gross State Product (GSP) in dollars per capita. The chart shows that the overwhelming number of states show a correlation between state and local spending and GSP. Notable outliers are New York, California, Wyoming, and Alaska, on the high spending side.