- Last year, GDP expanded by 2.8% and the private sector added 1.5 million jobs, but Trump’s Treasury secretary told a conference audience recently, “The private sector has been in a recession.” Bessent said the solution was to “reprivatize” the economy, while a second administration official suggested changing how economic figures are calculated.
As consumer spending slows and CEOs worry about the potential fallout of Donald Trump’s tariff and tax policies, major economic indicators are flashing red, with the Atlanta Federal Reserve Bank even suggesting that the economy has flipped into reverse.
That’s not a recent development, according to a top Trump economist. The entire private sector has been dragging, Treasury Secretary Scott Bessent said.
“The private sector has been in recession,” Bessent noted last week at an event at the Australian Embassy in Washington, D.C., according to Reuters. “Our goal is to reprivatize the economy.”
As proof, Bessent claimed the bulk of the job growth over the past 12 months took place within government and in sectors like health care and education, where, according to Bessent, pay and productivity growth are lower than in private sector work.
Health care accounts for 17% of America’s economic output and 14% of its employment; educational services account for about 9% and 8%, respectively, according to government data.
Bessent also blasted the Biden administration’s fiscal policy, saying, “The previous administration’s overreliance on excessive government spending and overbearing regulation left us with an economy that may have exhibited some reasonable metrics but ultimately was brittle underneath,” according to Reuters.
Last year, the economy added an average of 129,000 private sector jobs every month, according to the Labor Department: triple the rate of job creation in the government sector, and down slightly from 155,000 jobs a month in 2023. The nation’s GDP grew 2.8% last year, the Commerce Department notes, driven mainly by consumer spending and then by private sector investment, with government spending and investment ranking third on the list.
This year, however, government is likely to be a drag on growth as the so-called Department of Government Efficiency slashes federal headcount and spending, including hallmark projects like Biden’s Inflation Reduction Act and the Infrastructure Investment and Jobs Act, which earmarked billions of dollars to clean energy and manufacturing projects, many in red states.
But the administration has a solution for that too. Asked on Fox News’ Sunday Morning Futures if the Trump agenda could cut into economic growth, Commerce Secretary Howard Lutnick suggested changing how gross domestic product is calculated to exclude government spending.
“You know that governments historically have messed with GDP,” Lutnick said. “So I’m going to separate those two and make it transparent.”
The Commerce Department, as noted above, already breaks out government spending and private spending in its reports on GDP.