FULLERTON, Calif. — For decades, Gross Domestic Product outcome has been a set standard used worldwide to compare how countries' economies fare to others. 

But what happens if one governent decides to erase its own role from that equation? That's the idea U.S. Commerce Secretary Howard Lutnick, whose department calculates the U.S. GDP, brought up in an interview with Fox News earlier this year. 

What You Need To Know

  • GDP is a decadeslong-set standard that helps us compare economies worldwide on the same basis
  • Earlier this year, Commerce Secretary Howard Lutnick floated the idea of changing the way they calculate this economic indicator
  • Government spending accounts for about 20% of the total GDP in the U.S.
  • The next GDP report is expected at the end of April

“They count government spending as part of GDP, so I’m going to separate those two and make it transparent,” said Lutnick. 

The response came after questions about a possible drop in GDP caused by spending cuts from Elon Musk’s Department of Government Efficiency. 

The first GDP report under the new administration is set to come out at the end of April, and many economists are cautioning against any political manipulation. 

Pedro Amaral, professor of economics at Cal State Fullerton, says every GDP component plays a role in getting a good picture of the economy. 

“As you can see, government spending — or government consumption and investment, as it should be called — is a crucial part of GDP that accounts for about 20% of total GDP,” he said.

Amaral noted that government spending includes things like education, highways and all other services provided by the government. 

“It’s not a good idea because part of what the economy’s producing, certainly part of what consumer welfare is all about, is goods and services that, you know, part of them are built by the government,” he said.

If it were to happen, Amaral says we would no longer make an "oranges to oranges" comparison between economies. 

“Every country would have to do it for comparisons to work,” he said.

For graduate student Chris Ghidella, a change to the GDP equation would contradict past studies.

“So many other studies, and what we’ve learned from such an early age in terms of just our schooling, and it really discounts the significance of government within our economy,” said Ghidella. 

Amaral says the threat of this change is politically motivated. 

"I don’t think the commerce department will, in fact, go forward with taking government consumption and investment out of the official GDP statistics," he said. "I do think they might create a statistic that is GDP, net it out of government consumption and investment. But of course, that exists already. We can compute that already. So I think that that’s as far as it’s going to go. And it’s all part of the political rhetoric of the moment."

President Donald Trump’s commerce secretary is not the only one who has floated this idea. Elon Musk also tweeted that “a more accurate measure of GDP would exclude government spending.”

Musk's argument is that the government can then spend money on things that are not needed and inflate that GDP number. Government spending includes things like building bridges, roads and funding universities — all of which are major drivers of economic activity.