WEST PALM BEACH, Fla. (AP) – Government spending could be reported with GDP in response to questions about whether Elon Musk’s government efficiency department pushes for a cut that could lead to an economic downturn, Commerce Secretary Howard Lutnick said on Sunday.
“You know, governments are in trouble with GDP in history,” Lutnik said on Fox News Channel’s “Sunday Morning Futures.” “They see government spending as part of GDP. So I’m going to separate those two and make it transparent.”
Doing so may make a basic measure of U.S. economic health likely to make or distort basic measures. Traditionally, government spending has been included in the GDP, as changes in government taxes, expenditures, deficits and regulations may affect the path to overall growth. The GDP report already includes extensive details about government spending, providing economists with a level of transparency.
Musk’s efforts to reduce federal institutions could lead to layoffs from thousands of federal workers whose losses in income could reduce their spending, affecting businesses and the economy as a whole.
The commerce minister’s remarks echoed Musk’s argument made on Friday on X that government spending does not create value for the economy.
“A more accurate measure of GDP will exclude government spending,” Musk wrote on his social media platform. “Otherwise, you can expand GDP by spending money on things that don’t make people’s lives better.”
To date, the arguments expressed by Trump administration officials seem to downplay the economic benefits arising from social security payments, infrastructure spending, scientific research and other forms of government spending that can shape the economic trajectory.
“If the government buys tanks, it’s GDP,” Lutnik said on Sunday. “But the people who are going to pay 1,000 people who are considering buying tanks are not GDP. That’s a waste of inefficiency, a waste of money. Cutting this thing, showing in GDP, we’re going to get rid of that.”
The Economic Analysis Bureau of the Ministry of Commerce released its latest GDP report on Thursday, indicating that the economic growth rate in the last three months of last year was 2.3%.
The report makes it possible to measure the power that drives the economy, showing that late last year’s earnings were largely driven by larger consumer spending and rising revisions to defense-related federal spending. Nevertheless, the federal government’s components in its 2024 report in its full GDP report grew by 2.6%, slightly lower than the overall economic growth of 2.8% last year.
