Trump Administration Proposes Excluding Government Spending from GDP Calculation

Commerce Secretary Howard Lutnick argues for a revised GDP metric, raising concerns among economists about transparency and economic measurement.

Commerce Secretary Howard Lutnick announced plans to separate government spending from GDP calculations, citing a need for greater transparency.
The proposal has sparked debate among economists, who warn it could distort a key measure of economic health and complicate comparisons with past and global data.
Critics argue the move may obscure the economic impact of federal spending cuts, particularly those tied to Elon Musk's Department of Government Efficiency (DOGE) initiative.
The U.S. economy grew at an annualized rate of 2.3% in Q4 2024, with federal spending contributing modestly to this growth, according to the Commerce Department.
Economists caution that excluding government spending from GDP could make the metric more volatile and fail to account for the broader economic effects of government actions.