Economy
Related: About this forumTweaking GDP statistics won’t hide the fact that Americans are doing worse
By Matt Phillips
Uncle Sam is about to rewrite US economic history stretching all the way back to 1929.
With a statistical flick of the switch starting in July, the US government will increase the size of the worlds largest economy by about 3%. How? The agency that tallies up US GDP is going to be changing the way it counts spending on research and development. Heres the short version, from the Financial Times, which published a solid story on the change (paywall).
At present, R&D counts as a cost of doing business, so the final output of Apple iPads is included in GDP but the research done to create them is not. R&D will now count as an investment, adding a bit more than 2 per cent to the measured size of the economy.
Over at the Washington Post, Neil Irwin explains it this way:
Now BEA [the Bureau of Economic Analysis] will treat research and development and creation of artistic works as longer-term investments, not unlike factories, equipment, or software. On a purely technical level, this should more precisely match GDP in any one quarter to the actual economic value the nation generates in that span. In the old system, the value of the economic output of a Star Wars movie would only show up in GDP over decades to come, in the form of personal consumption expenditures like movie tickets and DVD sales.
So should you care?
Unless youre one of the people on Wall Street or in academia whose professional reputation rests on how closely they can guess where GDP growth will be each quarter, probably not. In fact, if youre interested in figuring out anything meaningful about the economy, like, say, how the people in it are actually doing, GDP is a pretty awful measure.
more
http://qz.com/77030/uncle-sam-will-now-rewrite-84-years-of-economic-history/
Demeter
(85,373 posts)This is another way to scam the 99% for the support of Korporate Krime.
Fuddnik
(8,846 posts)Even though absolutely nothing has changed. The economy can be worse (and probably will be), but the politicians can still pat themselves on the backs, and say, "See we saved you". Even though you're eating catfood instead of chicken, the numbers are up.
Time to pull out the pitchforks.
Purplehazed
(179 posts)real income as it relates to gdp is lower than before.
Demeter
(85,373 posts)See the geeks at Stock Market Watch Mon-Fri, and Weekend Economists, features of this group...