I did a round of interviews for CBC radio on Tuesday after the federal government's fiscal update was released, and it was often remarked that the 2009-10 deficit of $55.6b was the largest ever. I suppose I should have said that it sounds even larger if you say it was 5.56 trillion cents.
These numbers aren't really informative without context, so here's some. The data are taken from the Department of Finance's Fiscal Reference Tables, also updated on Tuesday:
The 2009-10 number is bad, but we've seen worse. Indeed, we had a string of 18 years in a row starting in 1977 where the deficit was a larger share of GDP than it was last year.
Here is the federal debt:
That upward tick will be something to watch in the next couple of years. A temporary blip is nothing to worry about. A sustained trend is.
I've found it instructive to look at spending and revenues using both methods of scaling the data.
After almost 30 years of drifting sideways, real per-capita spending jumped sharply. The stimulus program is set to expire in 2011, so the spending should stay in that region before falling back again (how far?) in 2011-12. Unsurprisingly, revenues fell during the recession, but they've already started coming back.
Here are the same series expressed as a share of GDP:
Once again, we see that jump in spending, but only back up to levels we saw twenty years ago.
I have to say that I can't get too excited by the swings at the end of those graphs, even if they do persist through the current fiscal year. On both the revenue and spending sides, the shifts are temporary and will recede during FY 2011-12. There's a better-than-even chance that the deficit will not go entirely away on its own and that further measures will need to be taken, but these decisions don't have to be made right away.