What happens if government spending is excluded from GDP reports

Commerce Secretary Howard Lutnick indicated potential changes in GDP reporting to separate government spending from GDP figures. This decision follows concerns about spending cuts promoted by Elon Musk's Department of Government Efficiency, which may lead to an economic downturn. Lutnick highlighted historical manipulation of GDP figures and aims to clarify this distinction for transparency. Musk contended that excluding government spending from GDP would provide a more accurate economic assessment. This shift could obscure the effects of spending cuts on job losses, particularly among federal workers. Lutnick noted the Trump administration's perspective downplays contributions from government programs like Social Security and infrastructure. The Bureau of Economic Analysis reported a 2.3% economic growth rate driven by consumer spending and increased federal defense-related spending. Government spending represented nearly 20% of personal income in 2024, exceeding $24.6 trillion. The administration plans to balance the federal budget through spending cuts, aiming to enhance economic growth and lower consumer interest rates.

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