The Variable Cost Burdens of State and Local Governments

The foundation for the burgeoning interest of economists in the state-local sector of the economy in recent years rests in part on the fact that state-local purchases of goods and services comprise a large and growing part of Gross National Product. By the first quarter of 1970 they amounted to $119 billion, 12.4 per cent of GNP,~ compared with only 4.8 per cent in 1942 and 8.2 per cent in 1957.2 State and local governments now contribute more directly to aggregate demand in the economy than the Federal Government, only $15 billion less than gross private domestic investment, and one-third more than consumer expenditures for durable goods.