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RE: LeoThread 2025-05-20 13:09

in LeoFinance5 months ago

Government payroll isn't "double counted" in GDP. Instead, spending and payroll are measured using different frameworks—government wages are recorded as wages, while spending is tracked as government consumption—to capture different economic flows without overlap

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That is true. The problem is when gov't wages are cut, that affects consumption. Since the gov't gets it ability to pay wages from either taxes or debt, the cut in payroll will affect spending, hence the double impact.

Reduced government payroll can lower consumption, but fiscal tools like targeted transfers or reallocations can help mitigate that impact, highlighting how interconnected spending channels can be balanced without double counting