Can we just change how we measure GDP? : Planet Money
Howard Lutnick, US commerce secretary, speaks to reporters following President Trump’s joint address to Congress on March 04, 2025 in Washington, DC.
There’s one statistic that rules them all when it comes to keeping track of the economy: gross domestic product (GDP). It’s the sum of all final transactions, so all the goods or services bought and sold, in an economy. GDP tells us how hot the economy is running, or how cool — like if we might be heading into a recession. And it’s an important tool to compare countries, policies, and politicians. It’s used by the U.S. government to allocate money and by businesses to make decisions about the future.
For close to a century the building blocks of GDP have been the same. Though there have been updates to the methodology behind calculating it. The U.S. Bureau of Economic Analysis, the federal agency that calculates it, is constantly tweaking their process to make GDP accurately reflect the changing economy.
Now the BEA’s boss, Commerce Secretary Howard Lutnick, has proposed a much bigger change: taking government spending out of GDP.
On today’s show, can the U.S. change how it measures GDP? We talk with a former head of the BEA — about what he thinks they’re likely to do now, and about the pressure he faced while trying to compile GDP for nearly two decades. Turns out, people have always been trying to bend it to make whatever grand project they’re working on look better.
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This episode of Planet Money was produced by Emma Peaslee and edited by Jess Jiang. It was fact checked by Sierra Juarez and engineered by Robert Rodriguez. Alex Goldmark is our executive producer.
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