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© Hedgeye Risk Management LLC. 110
Data Source: BEA, FactSet
The Acceleration in Government Spending Was The Hero of 1H23
Real Government Expenditure YoY
4.0
2.7
0.9
-0.3
-1.3
-1.6
0.5
0.7
-0.7
1.8
1.0
1.6
4.0
3.6
4.0
3.4
3.2
2.6
1.6
2.4
1.6
1.1
0.7
0.1
0.6
0.3
1.6
1.8
1.7
2.7
2.2
1.8
2.0
1.3
0.3
-0.4
-1.6
0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1
-2
-1
0
1
2
3
4
5
2Q23
1Q23
4Q22
3Q22
2Q22
1Q22
4Q21
3Q21
2Q21
1Q21
4Q20
3Q20
2Q20
1Q20
4Q19
3Q19
2Q19
1Q19
4Q18
3Q18
2Q18
1Q18
4Q17
3Q17
2Q17
1Q17
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
%
© Hedgeye Risk Management LLC. 111
Data Source: BEA, FactSet
Base Effects Broadly Steepen Through 2Q24
Tailwinds Turning to Headwinds Beginning This Quarter
3.64
2.52 2.49
2.68
1.65
1.19
0.77
0.10
-1.00
0.22
0.70
0.54
1.35
-0.7
0.7
0.5
-1.6
-1.3
-0.3
0.9
2.7
4.0
(2)
(1)
0
1
2
3
4
5
Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24
%
United States - Real Government Expenditure (YoY)
Base Effects Real Gov YoY
© Hedgeye Risk Management LLC.
Government Hiring Has Been A Rocket In 2023
Public sector jobs tend to
average ~5% of total payroll
growth over time.
2023 has seen almost 20%
of payroll growth come from
the public sector.
113
Data Source: BLS, ZipRecruiter, WSJ
It’s Not Only GDP Growth that has benefitted from Govt Spending. Payroll gains have seen the 2023 lift as well.
© Hedgeye Risk Management LLC. 115
Data Source: Bloomberg
…. and that is not disinflationary OR good for China
Deglobalization & Protectionism Increasingly Look Like The Next Hinge in (macro) History …

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Big (G): Debt & Deficits

  • 1. © Hedgeye Risk Management LLC. 110 Data Source: BEA, FactSet The Acceleration in Government Spending Was The Hero of 1H23 Real Government Expenditure YoY 4.0 2.7 0.9 -0.3 -1.3 -1.6 0.5 0.7 -0.7 1.8 1.0 1.6 4.0 3.6 4.0 3.4 3.2 2.6 1.6 2.4 1.6 1.1 0.7 0.1 0.6 0.3 1.6 1.8 1.7 2.7 2.2 1.8 2.0 1.3 0.3 -0.4 -1.6 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 -2 -1 0 1 2 3 4 5 2Q23 1Q23 4Q22 3Q22 2Q22 1Q22 4Q21 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14 2Q14 %
  • 2. © Hedgeye Risk Management LLC. 111 Data Source: BEA, FactSet Base Effects Broadly Steepen Through 2Q24 Tailwinds Turning to Headwinds Beginning This Quarter 3.64 2.52 2.49 2.68 1.65 1.19 0.77 0.10 -1.00 0.22 0.70 0.54 1.35 -0.7 0.7 0.5 -1.6 -1.3 -0.3 0.9 2.7 4.0 (2) (1) 0 1 2 3 4 5 Jun-21 Sep-21 Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 % United States - Real Government Expenditure (YoY) Base Effects Real Gov YoY
  • 3. © Hedgeye Risk Management LLC. Government Hiring Has Been A Rocket In 2023 Public sector jobs tend to average ~5% of total payroll growth over time. 2023 has seen almost 20% of payroll growth come from the public sector. 113 Data Source: BLS, ZipRecruiter, WSJ It’s Not Only GDP Growth that has benefitted from Govt Spending. Payroll gains have seen the 2023 lift as well.
  • 4. © Hedgeye Risk Management LLC. 115 Data Source: Bloomberg …. and that is not disinflationary OR good for China Deglobalization & Protectionism Increasingly Look Like The Next Hinge in (macro) History …