Source: ITR Economics – May 2025
Despite the dramatic headlines about federal spending cuts, discover why the data and timing does not support changing our economic forecast for 2025.
Federal government spending in the US accounts for approximately 23.8% of nominal GDP. The CBO projection does not recognize a big pullback this year. This makes sense since the personnel cutbacks really won’t show up to a significant degree until FY26 given how they were structured, and DOGE program cuts, while splashy for headlines, do not amount to a significant slice of all federal spending. Getting an exact figure is difficult since DOGE is not transparent with the figures and there is apparently some double counting in the tally. At face value, the cuts amount to 2.3% of federal spending.