4Q GDP revised downward – and intangible investment upward

This morning BEA published its second estimate of US GDP and revised the economy’s growth rate down to 2.4% from last month’s advanced estimate of 3.2%. According to BEA’s press release, the downward revision was attributed mostly to a lower estimate of personal consumption expenditures. However there was a huge upward revision in the growth in investment in intellectual property products (IPP), i.e. research and development; entertainment, literary, and artistic originals; and software. The advanced estimate had IPP investment growing at 3.2%. The second estimate comes in with a growth rate of 8%.
Not only does this change the number, it changes the story. The advanced estimate had investments in IPP declining somewhat from the 3Q rate of 5.8%. The newest data shows investment in IPP actually accelerating. The BEA statement does not describe why such a big revision. But that is something we need to understand.
IPP percent 4Q13 -2nd.png


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