Federal spending and investment is already down to a .4% rate, which is down 3.3% over the past year. Federal employment jobs have decreased by 52,000 over the past year and is now lower than before the recovery began.
For the long term, decreased federal spending along with increases in taxes should help the federal deficit. But in the short term, it is already affecting the recovery adversely. The cuts affect infrastructure spending at both the state and local levels, offsetting growth in the private sector which has been steady.
And stimulus funds for short term relief are dwindling. In 2010 and 2011, $180.7 billion were given to state and local governments. In 2012, that shriveled to just above $20 billion. For 2013, stimulus funds are expected to fall to $14.3 billion.
Federal employment is falling for the first time since the 2008 crisis, primarily among postal workers. Public sector jobs fell into negative growth for the fourth month in a row in June. Overall, the economic pictures still hangs precipitously upon Europe and Congressional action toward the expiration of current tax laws.


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