Final estimate of 1Q 2015 GDP and continued R&D concerns

In keeping with economist’s expectations, the third (final) estimate of the 1st quarter GDP showed the economy shrank by only 0.2%. The earlier estimate has shown a decline of 0.7%.
A look at the details reveal a more worrisome fact. Investment in Intellectually Property Products (IPP) slowed down to only 4.9% compared with 10.3% in the 4th quarter of 2014. The reason was that investment in R&D grew by only 2.7% compared to 17.2% in the 4th Q. Investments entertainment, literary, and artistic original were up by 2.4% compared to 5%. On the other hand, investment in software grew by 7.8% compared to 5.1% previously.
The history of revisions to the R&D numbers is also worrisome. The first estimate was of a 12.3% growth rate. The second was almost flat at 1.1%. Now the third estimate is of 2.7%. Such large revisions highlight the danger of relying on preliminary estimates.
IPP parts 1Q15 - 3rd.png

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