The US gross domestic product (GDP) will become 3 per cent bigger in July 2013 as part of a revamp that will see government statistics take into account components like film royalties and spending on research and development (R&D).
Currently, R&D spending is counted as a cost of doing business, so the final output is included in GDP and spending on research is not included.
Creative works like movies, television programmes, books, music and theatre are expected to add a further 0.5 per cent to the overall size of the US economy. The changes will affect everything from the measured GDP of different US states to the stability of the inflation measure targeted by the Federal Reserve, reported FT.
Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis (BEA), told the Financial Times: “We are carrying these major changes all the way back in time – which for us means to 1929 – so we are essentially rewriting economic history.”
Moulton added: “We’re capitalising research and development and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programmes, books and sound recordings.”
Furthermore, deficits in defined benefit pension schemes will be included to the GDP.
“We will now show a liability for underfunded plans, which particularly has large ramifications for the government sector, where both at the state level and the federal level we have large underfunded plans,” concluded Moulton.
The changes are in addition to a comprehensive revision of the national accounts that takes place every five years based on an economic census of nearly 4m US businesses.
Steve Landefeld, director of BEA, said it was hard to predict the overall outcome given the mixture of new methodology and data updates. “What’s going to happen when you mix it with the new source data from the economic census . . . I don’t know,” he said.
Landefeld, however, said that the revisions were unlikely to alter the picture of what has happened to the economy in recent years. “I wouldn’t be looking for large changes in trends or cycles.”