Not necessarily. Hypothetically speaking, if the federal government becomes more efficient, i.e., it produces the same services for less money, the FED could st

Not necessarily. Hypothetically speaking, if the federal government becomes more efficient, i.e., it produces the same services for less money, the FED could stimulate the economy with low interest rates, so that the private market employs the people released from the federal government and we will have higher production and higher GDP. Practically, speaking if you just fire a bunch of federal employees and close departments randomly, you are not making the government more efficient you are just making it less productive. Then if, at the same time, you put in a bunch of sudden arbitrary tariffs that cause inflation across the board, then you tie the hands of the FED and the FED cannot lower rates to preserve employment. So in that case, yes GDP will decrease.