Assignment 1

Federal Reserve Economic Data (FRED) is a database run by the Research Division of the Federal Reserve Bank of St. Louis. Data from this site can be viewed as graphs or text or can be downloaded to import to other databases. They have banking, business/fiscal, consumer price indexes, employment and population, exchange rates, GDP, interest rates, monetary aggregates, producer price indexes, reserves and monetary base, and U.S. financial data. The Federal Reserve compiles a time series that were collected by government agencies like the U.S. Census, and the Bureau of Labor Statistics. The data done by FRED is used in the media and is very important in financial markets.

Source: Quandl


Task 1: Define Federal Deficit and Debt

Federal Deficit: The amount by which the US government's spending is bigger than the money it gets from taxes in a particular year.

Federal Debt: The amount of money that the federal government has borrowed and not yet paid back. The government pays for most of its operations by raising money through taxes, but when tax revenues are not enough to cover everything the government wants to do, it borrows the rest.



The black line in this graph represents a balanced federal budget. The government maintains a small deficit spending at the end of every fiscal year. Policies that were put in place during President Clintons time in office let the government to run a surplus for a short amount of time. After 9/11 the deficit grew tremendously and wasn't until the Great Recession that this deficit grew to the point of being nearly unable to manage. national debt started to grow more after President Bush decided to enter the war with Afghanistan.

When the economy has an inflation then the money supply will increase, or the price levels will increase. Usually when the money supply increases the price levels will increase with inflation. Economists tend to frame their predictions and references based off of their adjustment for inflation. Inflation is measured using the Consumer Price Index (CPI) which is the measurement system that is used to understand how inflation would effect the economy.

The Gross Domestic Product (GDP) is the measurement that is looked at most often when determining a countries wealth because it measures everything that is imported and exported in that country. It includes government spending, investments in capital, net exports, and government purchases ( goods a services through local, state, and federal). This graph shows the Federal Surplus or Deficit as the Percent of GDP. Federal deficit is the excess of federal government spending over the revenue.

This graph shows the total public debt as a percentage of GDP, in 2019 the U.S.'s GDP was $21.428 trillion. The Gross Federal Debt (GFD) was about $22.7 trillion at the end of the fiscal year of 2019. The areas in gray on the map represent years where we had an economic recession, the biggest one being the one in 2008. Fiscal policies put in place prior to 2008 impacted the economy greatly. The war with Afghanistan from Bush's presidency has caused us to gather more and more debt as we spend money on that war. When Obama took to office the number became smaller but was still an issue, but quickly came back once Trump took office because of his tax cuts in 2017.

Because of our current pandemic with COVID- 19 Trump has decided to send out stimulus checks to American citizens in order to combat the high unemployment rate. While helpful to the people this may has a negative impact on our national deficit long term due to the U.S. having to reestablish a thriving economy. Currently because of the pandemic our GDP has fallen 4.8% within the first quarter of the fiscal year. Goods and services dropped 8% as stores have had to close Gross private domestic investment (with change in private inventories and fixed investments) also dropped 6% counting it as the fourth quarter of decline since 2009.

2015 total federal revenues in the fiscal year of 2015 were expected to be $3.18 trillion. Income tax paid by individuals was $1.48 trillion making around 47% of all tax revenues. Payroll taxes paid jointly by workers and employers was $1.07 trillion making about 34% of taxes. Lastly the corporate income paid by businesses came to $341.7 trillion making up 11% of tax revenues for that year. These three sources make up the fiscal year of 2015.

Individual taxes are and have been on the rise with corporate taxes getting cut more and more throughout the years. The reasoning behind cutting taxes on corporations is the old trickle down theory thought up by President Reagan. The theory states that with tax breaks and benefits for corporations the wealth will trickle back down to everyone else. The theory argues that for income and capital gains tax breaks with any other large financial benefits to large businesses, investors, and entrepreneurs this will stimulate economic growth. While the theory may sound feasible it has only caused a larger gap between the rich and the poor.


  • Discretionary spending: the portion of the budget that is decided by Congress through the annual appropriations process each year.

  • Mandatory spending: Congress legislates outside of the annual appropriations process usually less than once a year.

These spendings count for more than 90% of all federal spending and pays for all government services and programs.