GDP Report: Trump Team Could Redefine Growth Measure
Overall growth in 2024 changed little compared to growth in 2023.
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Updated on March 4.
Trump wants to change how economic growth is measured
The Trump administration is eyeing a change in how gross domestic product (GDP) is measured in the wake of federal spending cuts.
On Sunday, Commerce Secretary Howard Lutnik told Fox News that the Trump administration may split government spending from GDP. He said, “You know that governments historically have messed with GDP. They count government spending as part of GDP. So I’m going to separate those two and make it transparent.”
Similar remarks were made by Elon Musk, billionaire and leader of the so-called Department of Government Efficiency (DOGE) on Feb. 28. DOGE has recently taken action to lower government spending, which includes firing thousands of federal employees, freezing federal funding and eliminating government contracts.
It’s unclear why the administration has put the target on GDP data transparency since the Bureau of Economic Analysis (BEA) already breaks down government spending at the federal, state and local levels for each quarter. Those results are published by the BEA on a quarterly basis.
Economic data has shown some disappointing figures that include stubborn inflation levels; fewer hires; and lower consumer spending. Consumer confidence in the economy is down, as well. The latter is largely due to Trump’s recent tariff announcements, according to the Conference Board’s recent survey results.
GDP could be the next concern: On March 3, a forecasting tool published by the Atlanta Federal Reserve showed that GDP could contract by a rate of -2.8% in the first quarter of 2025. If GDP does indeed decline, it would be the first time since the first and second quarters of 2022.
In 2024, the U.S. GDP grew 2.8% compared to a 2.9% increase in 2023, according to a second estimate of real gross domestic product from the Bureau of Economic Analysis, released Feb. 27.
The GDP is the market value — in current dollars — of all goods and services produced within the United States in a given period; Real GDP adjusts that measure for inflation. Changes in GDP are expressed on an annualized basis.
Why did GDP increase in 2024?
The 2024 increase was primarily due to growth in consumer spending, investment, government spending and exports. Imports, which subtract from GDP, also increased.
GDP for the fourth quarter of 2024
The U.S. GDP grew less than the rate it did in the third quarter of 2024, according to the second estimate report from the GDP. <br>The fourth quarter — October, November and December — saw an annual growth rate of real GDP by 2.3%, the second estimate shows.
The fourth quarter growth rate was still still higher than the first quarter in 2024.
3.1% annual rate of growth in Q3 2024.
3% annual rate of growth in Q2 2024.
1.6% annual rate of growth in Q1 2024.
3.4% annual rate of growth in Q4 2023.
4.9% annual rate of growth in Q3 2023.
2.1% annual rate of growth in Q2 2023.
2.1% annual rate of growth in Q1 2023.
The third estimate for third quarter GDP will be released on March 27.
Why did GDP increase in Q4 2024?
The Q4 2024 increase in real GDP was largely due to an increase in consumer spending and government spending. Investment decreased.
Imports decreased in the fourth quarter.
What did consumers spend money on in Q4 2024?
Within consumer spending, increases were recorded in both goods and services.
Among the services that saw spending increases were:
Health care, led by hospital services and outpatient services.
And among spending on goods, these categories saw the largest increases:
Recreational goods and vehicles
Motor vehicles and parts
How did personal income change in Q4 2024?
Personal income increased in Q2 2024 while personal savings slowed, according to the report.
Current-dollar personal income (all sources of income including wages and salaries, government benefits, dividends and interest, business ownership and more) increased 4.5% in Q4 2024 compared to 3.2% in Q3 2024.
The personal consumption expenditures index (PCE) increased 2.4% compared to an increase of 1.5% in Q3 2024.
The core PCE index (PCE minus food and energy) increased 2.7% compared to an increase of 2.2% in Q3 2024.
How did GDP in 2024 compare to recent years?
In 2020, at the beginning of the COVID-19 pandemic, the annual rate of GDP dropped to levels far below even those during the Great Recession, federal data shows. By the end of 2020 and into 2021, GDP rebounded quickly. However, the first two quarters of 2022 showed signs of slowing down before a more robust finish at the end of the year. GDP continued its upward trajectory throughout 2023 and 2024. But GDP in 2024 (2.8%) grew slightly less than it did in 2023 (2.9%).
Here’s what else factored into overall GDP in 2023:
The price index for gross domestic purchases increased 2.3% in 2024. Compare that with a 3.3% increase in 2023 and a 6.8% increase in 2022.
The PCE price index increased 2.5% compared with an increase of 3.8% in 2023 and 6.5% in 2022.
The core PCE — minus food and energy — increased 2.8% in 2024 compared with a 4.1% increase in 2023 and a 5.2% increase in 2022. The Federal Reserve watches the core PCE closely when determining rates.
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