USAFacts Financial Analysis Methodology

Understand how we arrive at statistics on government revenue, spending, and debt, as well as on family and individual income and taxes.

Revenue and Spending

Government revenue and expenditures are based on data from the Office of Management and Budget (OMB), the Census Bureau, and the Bureau of Economic Analysis (BEA). Each is published annually, although due to collection times, state and local government data are not as current as federal data. Thus, when combining federal, state, and local revenues and expenditures, the most recent year shown is 2017, the most recent year for which all three sets of data are available. We show government spending through two different lenses:

Spending by mission: We recategorized several programs and functions to align them with four constitutional missions based on the preamble to the Constitution:

  • Establish Justice and Ensure Domestic Tranquility
  • Provide for the Common Defense
  • Promote the General Welfare
  • Secure the Blessings of Liberty to Ourselves and Our Posterity

This approach is modeled after what businesses do for their own management accountability and shareholder reporting. Public companies present their businesses in segments – a logical framework for discussing the areas in which the they operate. We do the same for government. In using this constitutional framework, we have made judgements in how we group programs. The following are key examples:

  • Wealth and Savings includes both Social Security and Medicare, both of which contribute to the financial well-being of retired Americans
  • Standard of Living and Aid to the Disadvantaged includes programs such as Pell Grants, Medicaid, food stamps (SNAP), and unemployment insurance, among others, all of which either help people in poverty, act as safety nets, or guarantee a minimum standard of living to all Americans.
  • Sustainability and self-sufficiency includes energy production and consumption, environmental protection, and agriculture, all of which are relevant to our longevity as a nation.

We do our best to match up Census and OMB categorizations, even though they are not always the same.

Spending by function: We also show spending by functional categories such as compensation for current and past employees, capital expenditures, transfer payments to individuals, interest on the debt, and payments for goods and services.

We followed many rules when aggregating data:

Net expenditures: We show net expenditures for government segments rather than separating all gross revenue from expenditures to avoid double counting. Combining federal, state, and local revenues creates the potential for double-counting when the federal government pays for state and local government business-like services or vice versa (such as when a local school district buys stamps from the federal government, or when the federal government makes Medicare payments to state and local public hospitals). We avoid this by netting these revenues from expenditures.

Grants to state and local governments: The federal government gives grants to state and local governments, which then spend on various programs. One of the largest examples of this is Medicaid, through which the federal government provides money to states that states then spend on healthcare for the disadvantaged. When combining federal, state, and local spending, we do not count these grants as they are already included in state and local expenditures.

Surplus and deficit gap: The federal government reports sending more money to state and local governments then they report receiving due to a discrepancy in the sources used. This is noted in the revenues and expenditures tables.

Differences between the sources: Federal financial data is collected according to the federal government fiscal year, which ends on September 30 of each year. State and local data are presented as of June 30 of each year. The two sources also show different levels of detail. For example, the costs of elections oversight at the federal level are available (Federal Election Commission), but the costs incurred by counties for election administration (polling places, ballots, etc) are contained within the general government category.

Please read the full methodologies below for more detail.

Balance Sheets

The USAFacts balance sheet, presented on and in the summary and annual reports, comes exclusively from the Federal Reserve’s Financial Accounts of the United States, which releases quarterly data on the Flow of Funds, Balance Sheets, and Integrated Macroeconomic Accounts. This is also known as Z1 data. See the latest report here. The Federal Reserve describes this publication as follows:

The Financial Accounts of the United States includes data on the flow of funds and levels of financial assets and liabilities, by sector and financial instrument; full balance sheets, including net worth, for households and nonprofit organizations, nonfinancial corporate businesses, and nonfinancial noncorporate businesses; Integrated Macroeconomic Accounts; and additional supplemental detail.

To show the balance sheet on the same reporting intervals as our revenue and expenditures, we have used Federal Reserve data from the quarter ending September 30 for the federal government and the quarter ending June 30 for state and local governments.

The USAFacts 10-K report also uses a different source, the Treasury Department’s Financial Report of the United States, for the federal government’s balance sheet. The 10-K uses the Z1 data for state and local balance sheet data. The 10-K contains more information on the differences between these two data sources.

Families and Individuals

The families and individuals tables presented by USAFacts show how key economic and demographic statistics vary according to three key variables: market income, family type, and elderly/non-elderly status. These groupings are not available consistently, and therefore we produced estimates using only government data.

The numbers in the families and individuals tables are estimates based on data collected from a variety of government sources, the two most important being microdata from the Current Population Survey (March Supplement) issued by the Census Bureau of the Public Use File issued by the Internal Revenue Service’s Statistics of Income Division (IRS-SOI). The CPS is a sample of households representing the U.S. civilian non-institutionalized population. It contains information on topics such as housing, health insurance, labor status, family arrangement, etc. Unfortunately, the CPS does not contain everything we want, so we supplement that file with data from elsewhere via statistical processes. In the case of income data, we statistically match the IRS Public Use File with the CPS. The IRS income data is superior to the CPS income data. In other cases, we impute variables in the CPS from other sources such as the American Community Survey using regression techniques for variables that are common to both files.

There are two types of economic units: families and individuals. We use the Census Bureau’s definition for each. If there are two or more related individuals living together, they are a family economic unit. If a person is living alone or in a household with no other related persons, that person is considered an individual economic unit. Therefore, some economic units have only one person, while other economic units have multiple persons.

We rank these economic units, which we call FIUs (family and individual units) by market income to place each in a percentile that shows the unit relative to other units in the population. (There are approximately 147 million family and individual units). After determining each unit’s market income percentile relative to all other units, we then place each unit into one of five categories:

  • Single person under 65 with no children under 18
  • Single person under 65 with children under 18
  • Married couple with head under 65 with no children under 18
  • Married couple with head under 65 with children under 18
  • Head aged 65 or over

It should be the noted that although we divide the families based on presence of children under 18, if a person is aged 18+ and still living in the family with relatives, she would NOT be her own economic unit unless she had her own subfamily.