According to Commerce Secretary Howard Lutnick, who is in charge of the organization that generates the gross domestic product figure, he wants to develop an independent economic report that excludes the effects of government expenditure.
Governments have historically tampered with GDP, as you are aware. Government expenditures are included in GDP calculations. On Fox News Channel, he declared, “I’m going to separate those two and make it transparent.”
This is in line with a recent statement made by Elon Musk on X, the social media platform he owns, in which the unofficial leader of the Department of Government Efficiency stated that excluding government spending would yield a more accurate GDP figure.
One thing that Musk and Lutnick might not know is that the Commerce Department, which he leads, already generates this kind of figure.
Only the third, or final, update of GDP contains the real GDP for private industries, which is produced by the Commerce Department.
The GDP growth rate differential between private industries and the GDP growth rate as a whole moves in lockstep and is frequently the same, as the table illustrates.
This does not preclude the Commerce Department from developing another ex-government figure or delaying the publishing date of the private-sector growth estimate.
Former President Joe Biden’s chief economist at the White House Council of Economic Advisers, Ernie Tedeschi, noted that government transfer payments, such as food stamps, Social Security, and the like, are indirectly included in GDP when they are spent by consumers.
In any event, the GDP outlook for the first quarter is bleak. According to Atlanta Fed GDPNow, a dramatic slowdown in consumer spending and a spike in imports ahead of potential tariffs will cause the economy to contract at an annualized pace of 1.5% in the first quarter.
