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The answer is that GDP simply includes the government spending in itself, by definition: https://en.wikipedia.org/wiki/Gross_domestic_product#Components_of_GDP_
by jerf 3y ago
The answer is that GDP simply includes the government spending in itself, by definition: https://en.wikipedia.org/wiki/Gross_domestic_product#Components_of_GDP_by_expenditure https://en.wikipedia.org/wiki/Gross_domestic_product#Compone...
I have "opinions", but if you are interested in this topic, rather than me dumping it here, it can be worth reading up a bit on GDP, then googling around for GDP criticisms. I think there's a sense in which it measures something useful, but it isn't measuring what people think it is and what the media sort of pushes it as meaning; it is correlated to the health of an economy but it is by no means a measure of the health of the economy, and the fact government expenditures are simply straight-up added to the GDP has such an obvious way for the government to manipulate the numbers that I can't hardly even call it an exploit. Whether they are doing that, I'll leave that to the reader to decide.
Another relatively obvious issue is that the GDP number waved around in the popular press is generally not adjusted for inflation. That's not just the US GDP in 2023, it's any GDP the press will talk about, anywhere and anytime, so I'm not trying to make any stealth political point here. It's something to be aware of in any context a "GDP" comes up, look to see if it's inflation-adjusted or not. Such measures exist and more serious economists definitely use them. The wikipedia page I linked to above has a wide variety of other interesting definitions and that's still a Wikipedia overview itself, of course, not the fullness of econometrics.