The Trump administration may exclude government spending from GDP, obscuring the impact of DOGE cuts

WEST PALM BEACH, Fla. (AP) — Commerce Secretary Howard Lutnick said Sunday that authorities spending could beryllium separated from gross home merchandise reports successful effect to questions astir whether the spending cuts pushed by Elon Musk's Department of Government Efficiency could perchance origin an economic downturn.

“You know, that governments historically person messed with GDP,” Lutnick said connected Fox News Channel's “Sunday Morning Futures.” “They number authorities spending arsenic portion of GDP. So I’m going to abstracted those 2 and marque it transparent.”

Doing truthful could perchance complicate oregon distort a cardinal measurement of the U.S. economy's health. Government spending is traditionally included successful the GDP due to the fact that changes successful taxes, spending, deficits and regulations by the authorities tin interaction the way of wide growth. GDP reports already see extended details connected authorities spending, offering a level of transparency for economists.

Musk's efforts to downsize national agencies could effect successful the layoffs of tens of thousands of national workers, whose mislaid income could perchance trim their spending, affecting businesses and the system astatine large.

The commerce secretary's remarks echoed Musk’s arguments made Friday connected X that authorities spending doesn’t make worth for the economy.

“A much close measurement of GDP would exclude authorities spending,” Musk wrote connected his societal media platform. “Otherwise, you tin standard GDP artificially precocious by spending wealth connected things that don’t marque people’s lives better.”

The statement arsenic articulated truthful acold by Trump administration officials appears to play down the economical benefits created by Social Security payments, infrastructure spending, technological probe and different forms of authorities spending that tin signifier an economy's trajectory.

“If the authorities buys a tank, that’s GDP,” Lutnick said Sunday. “But paying 1,000 radical to deliberation astir buying a vessel is not GDP. That is wasted inefficiency, wasted money. And cutting that, portion it shows successful GDP, we’re going to get escaped of that.”

The Commerce Department's Bureau of Economic Analysis published its astir caller GDP study connected Thursday, showing that the economy grew astatine an yearly complaint of 2.3% successful the last 3 months of past year.

The study makes it imaginable to measurement the forces driving the economy, showing that the gains astatine the extremity of past twelvemonth were mostly driven by greater user spending and an upward revision to national authorities spending related to defense. Still, the national government's constituent of the GDP study for each of 2024 accrued astatine 2.6%, somewhat little than wide economical maturation past twelvemonth of 2.8%.