My pet theory is that government spending, and in more detail government payrolls, are the most accurate predictors of economic distress. The more government hires and pays employees, the more economic problems.
For instance on the chart here, you can kind of pick out the depression & recessionary periods. It would be in a relative sense, so when spending goes up, you get a recession. The reason for the relative issue is that it would be a sort of "shock" to society. There are tax, demographic, and specific spending issues that would go into the model of course.
http://www.usgovernmentspending.com/...ury_chart.html
My main point is that governments do things that inhibit economic activity. For instance it inhibits natural drug trades. It also inhibits natural financial transactions because people are afraid of buying/selling because of tax implications. It also makes people stressed and that inhibits financial activity.
One of my clients isn't paying me because his Greek client isn't paying him because of some stupid tax form. That's an economic inhibitor. The Greek government is getting nasty about tax forms and such. I would predict that this will lead to a drop in economic activity in Greece. In fact off the top of my head it already has. The GDP of Greece has dropped quite a bit recently.
We're finally starting to see a little economic growth in the US. My theory for the reason for this is that the stimulus money has finally run out and federal & state governments are finally starting to lay off employees.
Direct payments to individuals like social security, however, may be economic stimulators. So would government payments to private contractors for necessary infrastructure, but not military spending. In my model government employees would be the main economic depressant.
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