Check your government statistics going forward, as methods are changing. The portion of GDP from government spending is already reported. Excluding government spending from GDP is only a change in definition that doesn’t change the economic facts. Maybe it will keep low-information citizens in the dark, but their definition of a recession is “when I lose my job”.
Commerce Secretary Howard Lutnick said Sunday that government spending could be separated from gross domestic product reports, March 2, 2025
" “You know, that governments historically have messed with GDP,” Lutnick said on Fox News Channel’s “Sunday Morning Futures.” “They count government spending as part of GDP. So I’m going to separate those two and make it transparent.” Doing so could potentially complicate or distort a fundamental measure of the U.S. economy’s health. Government spending is traditionally included in the GDP because changes in taxes, spending, deficits and regulations by the government can impact the path of overall growth. GDP reports already include extensive details on government spending, offering a level of transparency for economists."
“Latest estimate: -2.8 percent — March 03, 2025
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -2.8 percent on March 3, down from -1.5 percent on February 28. After this morning’s releases from the US Census Bureau and the Institute for Supply Management, the nowcast of first-quarter real personal consumption expenditures growth and real private fixed investment growth fell from 1.3 percent and 3.5 percent, respectively, to 0.0 percent and 0.1 percent.”
"Latest estimate: -1.5 percent — February 28, 2025
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the first quarter of 2025 is -1.5 percent on February 28, down from 2.3 percent on February 19. After recent releases from the US Bureau of Economic Analysis and the US Census Bureau, the nowcast of the contribution of net exports to first-quarter real GDP growth fell from -0.41 percentage points to -3.70 percentage points while the nowcast of first-quarter real personal consumption expenditures growth fell from 2.3 percent to 1.3 percent. "
The first quarter is on track for negative GDP growth, Atlanta Fed indicator says, Feb 28 2025
“The week also brought some concerning news out of the labor market as initial unemployment claims hit a level that was last higher in early October.”
You think? Government spends around $5 trillion, including everything from Social Security checks which go out to Medicare & Medicaid payments to health care providers, not to mention another trillion or two for the Pentagon.
You think those payments for howitzers and tanks don’t provide paychecks for people, and those paychecks aren’t spent at WalMart and the Ford dealership? Is all of that not “GDP”?
I truly do not understand the thinking here, but then there is a lot going on these days that I don’t understand.
Me too, especially regarding “thinking” as opposed to deck chair redecorating, but I am convinced that who/whatever is behind it wants to use a technical definitional change to figleaf an almost certain loss of confidence and resultant downward lurch in the main scoring statistics for economic growth and well-being.
The unemployment rate might be a more important indicator of how the economy is doing, and there are 2 different measures:
ADP® National Employment Report (NER)
U.S. Bureau of Labor Statistics Unemployment Rate [UNRATE]
NER is due out Wednesday and does not include government workers. UNRATE is due out Friday.
Are “Social Security checks” really included in GDP? Why? When people spend their social security checks on stuff, THAT STUFF should be included in GDP (assuming it is US stuff of course), but why include checks in GDP? And if we decide to include all checks sent to people by government in GDP, why not just send another few trillion a year of checks and grow the GDP gangbusters!
When employers pay wages it’s for services rendered. When government sends “Social Security checks” it’s a withdrawal of a deposit. Insurance awards are not income and, logically, neither should Social Security checks be considered income.
This is an interesting idea that some here have and it may be helpful to think about what lies behind it.
SS money comes into government coffers from people’s income, typically deducted from a paycheck for work done by an individual. That money is registered on a person’s own SS ledger and is available to inspect. The money is paid out of the SS fund, however, so when it comes time to get the SS benefit, that money is not the $ amount paid in years before, although there is a relationship to it: the more you earn throughout your work life the more you have deducted from your income going to the SS fund (to a point) and bears a proportional amount you receive in retirement.
It is this concept that is related to insurance in a sense. You pay an amount like insurance in case something happens to you, which is simply to survive long enough to get the benefit.
But is it really a form of insurance, or at least primarily insurance? Is it a form of income? If it is only insurance, then there should be no tax on it and indeed, that was one thing brought up in the political campaigns. Not so much traction on it lately, though.
Social Security premiums are pre-tax dollars. There is no debate here, social security is deferred income. As such the distributions are income and should be taxed.
By “Social Security premiums” do you mean the amount deducted from the worker’s pay? That would make it a bit different from buying insurance.
Absolutely! Insurance “awards” are not proportional to insurance premiums. Insurance is the transfer of risk. If 1000 people each buy a million dollar policy and pay $1,000 each in premiums, and if one has an incident that the insurance covers, the insurance company pays back all the premiums to just one insured person. The same principle applies to Social Security. The details differ [radically ].
Yes, the amount deducted from my pay. However, my health insurance premiums from my employer are also deducted pre-tax. And the benefit I get from those payouts is not taxed as income. So my argument falls apart.
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