How the government could mess with GDP.

From Marketplace, I'm Sabri Beneshore, in for David Brancaccio.

Every three months, the U.S. government reports on the growth and size of the U.S. economy.

It is the mother of all economic numbers, gross domestic product, GDP.

U.S. Commerce Secretary Howard Lutnik says he wants to take out government spending from that number in official statistics.

But government spending is literally part of the definition of GDP in every government economics textbook.

Julia Cornado is founder of macro policy perspectives and joins us to talk about it.

Hi, Julia. So what would the consequences be of taking out

government spending from GDP? Well, as you know, that would be an incomplete picture of the

economy to exclude the government sector, which is just under 20% of the economy, including

state and local government spending.

But more broadly, the calculation of GDP follows an international standard that the U.S. helped set.

So this would be a real disruption to our understanding of the economy and to our participation

in transparent national accounting, which we insist

that other countries follow.

Do you think that this could or would conceal the impacts of doge cuts on GDP?

Potentially.

Certainly if we are seeing cuts in spending, cuts in employment at the federal

level, that would reflect as a negative in GDP. And this might be an attempt to downplay

the importance of that. What would this change mean for markets?

So if there is a interruption in or a distortion in the information that we receive on the

economy, that could disrupt the ability of markets to assign appropriate prices to

...