Economics Statistics Report Stats II 4/25/12

Abstract: In this report, I will be examining the debt levels of the United States and using forecast methods to predict future budget surpluses or deficits (most likely deficits). I will be using several different data sets obtained from the Office of Management and Budget on the White House website, and several different forecasting methods. I hope you can learn something from my report!

Budget Surplus/Deficit in Dollars

400,000 200,000 0 -200,000 -400,000 Value -600,000 -800,000 -1,000,000 -1,200,000 -1,400,000 -1,600,000 -1,800,000 Data Point Actual Forecast Linear (Forecast) 1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103 109 115

(Table 1.1)

This chart was created from forecasting future years off of the budget surpluses and deficits that the United States has ran since 1789. As you can see the moving average gives us a fairly accurate forecast (since there are spots where you cant even see the actual blue line!) I also inserted a trend line which gives us a definite idea of the downward slope of our countrys budget.

This data set gave us these values as its forecast values: 2012 estimate 2013 estimate 2014 estimate 2015 estimate 2016 estimate 2017 estimate -1,377,064 -1,235,147 -1,011,237 -756,247 -665,542 -645,330

Budget Surplus/Deficit as a % of GDP

10.0 5.0 0.0 1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52 55 58 61 64 67 70 73 76 79 -5.0 % of GDP -10.0 Actual -15.0 -20.0 -25.0 -30.0 -35.0 Forecast

Years

(Table 1.2) This shows us a forecast and actual line graph of the US budget as a percentage of GDP. This makes me feel a little better after I looked at the previous graph, because comparatively this one looks a lot better. The only bad part, right in the beginning was most likely so bad because we were fighting for our independence from the Motherland. When we consider our budget deficits as a percentage of the GDP, they do not look as threatening as the previous graph. This is because as the United States grew into the superpower we know them as today; we made a lot more money as a country, and had a bigger budget deficit. These are the forecast estimates from the percentage of GDP graph. As we can see by the rise of the forecasted values, this estimate has us climbing our way back to a budget surplus and out of debt. 2012 estimate 2013 estimate 2014 estimate 2015 estimate 2016 estimate 2017 estimate -8.7% -7.6% -6.0% -4.3% -3.6% -3.3%

The third data set I have chosen to use is the history of the amount of money spent by the Social Security Office. Numerous people claim that Social Security plays a key role in digging our 15 trillion dollar hole that we find ourselves in. That being said, I decided to take a look at the data and find out for myself. This is what I discovered.

Moving Average
1,200,000 1,000,000 800,000 Value 600,000 400,000 200,000 0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55 57 Data Point Actual Forecast

(Table 4.1) (In Millions of Dollars) 2012 Estimate $650,269 2013 estimate $677,140 2014 estimate $747,153 2015 estimate $829,505 2016 estimate $886,041 2017 estimate 934,961

What I have found is that the spending by the Social Security Office has increased dramatically and while it is predicted to climb to close to a billion dollars in 2017, a billion dollars in a 15 trillion dollar debt is just a drop in a bucket. I think we need to tackle the bigger issues of Medicare and Medicaid and pensions and things of that nature.

Recap: We have discovered that the United States has found itself in quite the hole. On the bright side, my first two forecasts have the US climbing towards having a budget surplus for the first time since the Clinton administration. While that is a good place to start, we may just be cleaning up the overflow of the spill rather than unplugging the drain stopper. There is much work that needs to be done, and getting the spending of programs like Social Security and Medicare is a good place to start.

Hope this helps, Travis Clark