4Q GDP and investment in intangibles

Somewhat disappointing news this morning from BEA’s advanced estimate of U.S. 4th quarter GDP. According to this first estimate, GDP grew by only 2.6% in 4Q 2014. I say only because expectations were for a 3% growth rate. Still, the economy continues to grow at a healthy pace (see chart below).
The growth in business investment in intellectual property products (IPP) remained at a high level at a 7.1% increase with a positive trendline (see chart). The 3Q growth rate was 8.8%. Software investment picked up a little with a 9.4% growth rate in 4Q compared with a 8.9% growth rate in 3Q. R&D slipped somewhat to a still strong level of 6.1% in 4Q compared to a 10.6% increase in 3Q. Growth in investment in entertainment, literary, and artistic originals remained steady at 2.5% in 4Q; it was 2.4% in 3Q. As the chart below shows, investment in IPP has tracked but exceeded overall GDP growth recently. However, over time the two have often diverged quite extensively.
Remember that this is the advanced estimate. It is subject to considerable revision as key pieces of information on the last three months have yet to be compiled (such as December’s trade data).
GDP 4Q14 - 1st.png
IPP percent 4Q14 -1st.png
IPP parts 4Q14 - 1st.png
GDP-IPP 4Q14 - 1st.png

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