The Net Result of the Change in GDP Measurement

From Forbes:

The U.S. Economy got a boost last month from the Bureau of Economic Analysis, but not one that will show up in jobs or manufacturing output. The agency upwardly revised gross domestic product going back to 1929, revisions that incorporate new ways of defining what goes into GDP. The revisions do have some effect on the slope of the long-term trend, but not by nearly enough to revise away recent weakness.

Real GDP growth for 1929-2012 was boosted by 0.1 percentage point; for 2002-12 by 0.2 percentage point; and for 2009-12 by 0.3 percentage point. But the differential boosts barely altered long-term patterns.

Growth averaged 3.3% from 1929 through 2012, a period that includes the Great Depression; and it averaged 1.8% from 2002 through 2012, a period that includes the Great Recession. But from 2009 through 2012, which mainly covers the expansion since the Great Recession, growth averaged just 2.4%. The first half of 2013 has done nothing to improve that pattern, with growth running at an annual rate of 1.4%.

As for the definitional changes, the two principal ones require counting two additional kinds of spending as part of the capital investment portion of GDP: spending on research and development, and on the creation of films, books, TV shows, and fine art. Those two additions make sense. And since spending of this kind has grown faster than most other kinds, it has provided that slight extra lift to recent GDP....MORE