Revised 2Q 2013 GDP show intangibles down

There is good news and bad news in this morning’s revised 2Q GDP data from BEA. The good news is that the GDP an annual rate of 2.5% rather than the weaker 1.7% reported last month in the advanced estimate (see previous posting). The upward revision was due in part to better than estimated number on the trade deficit. The revision was even larger than the 2.2% revised growth rate that economists had expected.
The bad news concerns the new GDP category of “intellectual property products.” As you recall from my earlier discussions, this category includes research and development; entertainment, literary, and artistic originals; and software. Last month’s advanced estimates showed business investment in this subset of intangible assets growing in the 2Q by a healthy 3.8%. According to today’s data, investment actually declined by 0.9%.
The new data does not break down the three components of this new category. Nor does it give the reason for the large revision. But it is worrisome that this major driver of future economic growth has gone negative.

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