Most federal spending is not a contract
American Factbook Research
Figures as of
Ask what the federal government spends money on and the picture that comes to mind is usually procurement: aircraft, consultants, construction. In fiscal year 2025 the government reported $5.30 trillion of obligations, and contracts were 14.7% of it.
The largest share by far went out as direct payments to individuals — $3.25 trillion, or 61.3% of everything reported. Grants were second at $1.25 trillion and 23.5%. Contracts, at $778 billion, were third.
The share has roughly halved
In fiscal year 2008 contracts were 26.2% of federal obligations. In fiscal year 2025 they were 14.7%.
Contracts did not shrink. They grew, from $537 billion to $778 billion. Direct payments grew faster — from $1.10 trillion to $3.25 trillion, taking their share from 54% to 61.3%.
What this does and does not establish
These are obligations recorded in each period, as agencies reported them. The brief establishes the composition of what was reported and how that composition moved. It does not establish why, and a change in the mix can follow from a change in a program, in eligibility, in the number of people eligible, or in how awards are classified. The record distinguishes none of those.
It is also not a statement about waste, efficiency, or whether any of it should have been spent. A direct payment and a contract are different instruments, not a good one and a bad one.
Why the composition matters more than the total
A single figure for federal spending hides that most of it is one instrument behaving one way. Direct payments are steady through the year and driven by how many people qualify for a benefit. Contracts concentrate sharply at the end of the fiscal year. Grants concentrate at the start. A total that averages the three describes none of them, and a change in the total can be any of the three moving while the others do not.
That is why this hub reports the instruments separately, and why a page that shows one figure for federal spending also shows what it is made of.
What this cannot show
- USAspending reports obligations as agencies submitted them. It is not an audited financial statement and does not reconcile to one.
- An obligation is a binding commitment to pay, not money paid out. Money actually paid is an outlay, which Treasury reports separately.
- Award types are not equivalent quantities. The face value of a loan guarantee and the price of a contract are different kinds of number, and this brief compares their shares of a total rather than claiming they measure the same thing.
- The most recent fiscal year is excluded from every comparison here because it is not over. Contracts are the instrument that concentrates in September, so a part-year figure understates them.
- This brief describes what was reported. It does not establish why the mix changed, and nothing here is a claim about a policy or a decision.
Sources
- USAspending API v2, U.S. Department of the Treasury, Bureau of the Fiscal Service. U.S. Government work, public domain (17 U.S.C. 105). Retrieved 2026-09-19.
Every figure above is the recorded result of a query checked into the repository alongside this text. Continuous integration re-runs those queries and refuses the change if a number here and a number there disagree. Read the methodology, or the datasets behind it.
Published by American Factbook LLC. An independent publication.