The way the US economy is measured has changed, to include the amount spent on intellectual property outlays such as pop song production and drug patents for the first time.
“GDP is probably the single most important statistic affecting businesses, households, and governments,” says Steve Landefeld, director of the Bureau of Economic Analysis (BEA), which measures gross domestic product – the total amount of goods and services produced in the US economy during a given quarter.
Calculating GDP, he says, is incredibly difficult, because “it’s a continually changing economy that we’re chasing”.
Now, in what the BEA says is the biggest change in the calculations since 1999, the way that US economic activity is reported has been updated.
The goal is to finally include something many have already noticed: the shift away from the production economy of factories and farms towards the knowledge economy – the investment and economic production in intellectual property, which includes everything from the amount spent on writing a hit TV show to researching a cancer cure.
Why are the calculations changing?
Think back to 2007. It was the year of the franchise: Spider-Man 3 and Shrek the Third topped the box office.
For economists, these films were some of the most mysterious products created in the US economy that year.
Although revenues from the box office, as well as DVD sales and TV subscription fees, were included in the GDP calculations, not a single cent spent on making these films – or any song or TV show ever made – has been included in the way economists calculate GDP.
In fact, the BEA estimates that in 2007, the total amount spent on producing creative output such as films, TV and music was $70bn (£46bn at today’s exchange rates).
However, because of the way GDP was calculated at the time, none of that was included in the output figure.
If you added in the amount spent on research and development – such as producing a new blood pressure drug or computer chip – that’s another $300bn that wasn’t counted.
Now, those expenditures, as well as tweaks to how pensions are calculated as part of economic activity, will be included in the figures