US GDP is about to get a lot bigger
The economy will grow by 3% in July because of a shift in how the government measures output, especially of intangible assets.
Starting in July, the U.S. gross domestic product will officially jump by 3%. The change isn't due to some miraculous economic event but rather from a shift in the way the government looks at statistics in the digital age.
Brent Moulton, an associate director at the Commerce Department's Bureau of Economic Analysis, says the revised benchmark economic number will take into account billions of dollars in intangible assets that have previously been left out.
"We’re capitalizing research and development," Moulton told the Financial Times, "and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programs, books and sound recordings."
For example, according to the FT, the output of iPads produced by Apple (AAPL) is currently included in GDP, but the R&D needed to create those iPads isn't. With the changeover this summer, R&D will now be considered an investment and will add to the overall measured size of the economy.
Shortfalls in defined-benefit pension plans will also be reevaluated. "We will now show a liability for underfunded plans, which particularly has large ramifications for the government sector," said Moulton, "where both at the state level and the federal level we have large underfunded plan."
The revisions will make the U.S. one of the first countries to adopt a new international standard for tallying up GDP figures.
Other BEA officials say the changes aren't expected to alter views of economic trends and cycles over the past several years -- but they're not sure how the revised data and methodology will affect the future.
"We are carrying these major changes all the way back in time -- which for us means to 1929," Moulton told the FT, "so we are essentially rewriting economic history."
The new accounting will apparently add the equivalent of a country the size of Belgium to the international economy. And it might also, according to Management Today, prompt other countries to follow Washington's lead because "the U.S. provides the de facto standard for GDP measurement around the globe."
If the lefty writers here would finally show the TRUE health of the economy, it would show the "Unofficial" unemployment numbers (that which people have fallen off the gov't tit, or just stop looking/applying altogether), around 25 to 30 percent. Unfortunately though, instead of showing US the TRUTH about how badly the US fiscal condition is, Noblaba and his bretheren continue to smear and spin the truth to the point that the American taxpayer is so dizzy that he/she just doesn't care anymore, they just want the pain stopped. Massive bailouts of UNION run auto manufacturers, bailouts of failed "green energy" companies, and bailouts of mortgage companies have put this country SO far in the red, that it is all but impossible to fathom. Add the added cost of Noblabacare coming 2014 full tilt, and you have all the making for the perfect DEPRESSION that the democrats will STILL try to blame W on.
Enjoy the GDP "good news" while it lasts. Then when you libs finally put down the kool aid and get back to REALITY, you can join us in misery again...
A dis-satisfied customer and voter...
Just what we need another fake number to add to the GDP
why don't they just add a Debt Reduction Number
which will make the GDP look like it is 10 times what the National Debt is. Then we will never have to worry about Debt getting too large for GDP it will be by definition always just 10 percent of GDP.
Gee folks the GDP has nothing to do with reality anymore.
Wonder how much they are going to add to 1945 when we invented nuclear power -- that should have jumped GDP by a factor of 1,000,000 in 1945.
Wonder how much they are going to add to 1939 (or was it 1938) when the world's best grossing movie was made. Adjusted for inflation and sells since 1938 GONE WITH THE WIND has brought in over $15 billion dollars and growing.
Wonder how much they are going to add to GDP for the invention of the cotton gin or the submarine or the computer or the laser or the rocket (we invented it before Germans but never developed it).
Gee how much are they going to add to GDP for the invention of the airplane.
We should be seeing adjusted GDP's north of $100 trillion before 1910. Just the invention of oil and gas and the car will add $200 trillion to that year's GDP.
We will be all be rich as GDP will be in the trillions of trillions of dollars in current dollars.
The war years alone will push it up that much.
this means the global GDP hit about $1,000,000,000,000,000,000,000,000,000,000,000,000 dollars the YEAR MAN DISCOVERED FIRE.
Pretty much any additional adds to GDP will be drawfed by this one add.
Let us see - cooking,plastics,metal,oil,clothes,engines,making toliets and the plumbing pipes and running the water just about everything we do is effected by fire.
Perhaps my estimate of the impact of fire on GDP is an understatement.
Perhaps the wheel will add 10 percent of what fire did but nothing else will come close.
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