The US administration will redefine how the government calculates gross domestic product, a move that critics warn could artificially manipulate economic performance metrics, Commerce Secretary Howard Lutnick revealed Sunday.
Lutnick told Fox News Channel‘s “Sunday Morning Futures” that the government will remove certain spending categories from GDP measurements, aligning with Elon Musk’s controversial push for economic “efficiency.”
“Governments historically have messed with GDP,” Lutnick said, suggesting a fundamental redesign of economic reporting. The proposed change would exclude government expenditures that Musk claims do not create direct economic value, potentially masking the full scope of government economic impact.
Government spending currently comprises nearly 20% of personal income, which reached $24.6 trillion last year. The latest GDP report showed the US economy grew 2.3% in the fourth quarter of 2023, with federal spending increasing 2.6% — a figure that may soon disappear from standard calculations.
The initiative threatens to cut tens of thousands of federal jobs. Musk has pressed agencies to downsize aggressively, targeting what he describes as unnecessary government roles.
Lutnick defended the approach, drawing a sharp line between what he considers productive and unproductive spending. “If the government buys a tank, that’s GDP. But paying 1,000 people to think about buying a tank is not GDP. That is wasted inefficiency,” he emphasized.
Economists have raised sharp concerns about the potential for statistical manipulation. Traditionally, government spending has provided a critical lens into the government’s economic role, and removing these metrics could obscure key economic indicators.
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