Starting today, the Census Bureau is publishing a new advanced trade data series. This advanced data covers trade in goods only. (See Census Bureau notice.) Since this excludes services and intangibles trade, I will not be covering this data carefully
The next release of the full set of trade data is next week. I will publish my analysis of intangibles trade then.
According to Census, the goods trade deficit jumped from $59.7 billion in May to $62.3 billion in June. Export were down and imports up.
GDP data released this morning from BEA shows the US economy growing at an annual rate of 2.3%. Economist had predicted an annual GDP growth rate of 2.5%. This rate for the second quarter of 2015 is a large increase over the anemic 0.6% for the first quarter. And that revised figure for the first quarter was better that the previous data showing a contraction in the economy.
Investment in Intellectually Property Products (IPP) slowed down slightly to 4.9% from 7.4% in the 1st quarter of 2015 and 7.4% in the 4th quarter of 2014. [This is a revision downward for earlier quarters from previously published data.] R&D grew by 5.2% compared to 6.9% in 1Q and 8.8% in the 4Q. Investment in software grew by 7.8% compared to 9.1% in 1Q and 5.6% in 4Q. On the other hand, investments in entertainment, literary, and artistic original dropped by 2.4% while growing by 2.2% in 1Q and 4.9% in 4Q.
Today’s BEA release also contains data revisions going back to 1969. This includes earlier data on Intellectually Property Products. More analysis later of both the revisions and what the data tells us about previous decades.
From a recent blog by The Conference Board – Blaming the productivity slowdown on measurement issues takes our eyes off the ball:
The key factor to drive productivity is investment. In the 1990s it turned out that, once we measured the price changes for investments in computers and software well, we did find their impacts on productivity growth. Today, more than at that time, we need to focus on the complementary investment in intangible investments. Concerns about measurement might as well focus on those types of investments which are only partially measured as investment to begin with. The capitalization of R&D and software in the National Income and Product Accounts is an important step forward. But only once the other spending on intangibles, including workforce training, organizational innovations and marketing and branding, is also treated as investment rather than expenditure, we will get a sharper view of where the productivity gains from new technology have ended up.
The standard image of the U.S. economy is one of two mega-sectors: manufacturing and services. This is both is outdated and misleading. It is still basically based on Colin Clark’s 1940’s division of the economy into primary, secondary and tertiary. Over the years this has been simplified to goods versus services as the extractive industries (primary) have been lumped with the manufacturing (secondary) industries. This classification has been commonly used to declare that the U.S. has become a service economy.
However, using this framework to measure employment shows that the U.S. has been a “service” economy for 100 years. Employment data on agriculture/fishing/mining (primary), manufacturing, construction and services shows the US jumped from directly from agriculture to services. We were never a majority manufacturing economy. Manufacturing peaked at around 27% of total employment in 1920 (30% for combined manufacturing & construction) with services at the same time comprising around 41% of total employment.
That most people work in service industries tells us little about the structural changes occurring in the economy. This is why I am publishing employment data as tangible-producing and intangible-producing. See my see most recent posting and my new report Employment in tangible-producing and intangible-producing industries: Preliminary findings and methodology.
As readers of this blog know, I have been publishing monthly employment data in an alternative framework (see most recent posting). That framework divides employment into jobs in tangible-producing industries (including tangible services) and jobs in intangible-producing industries.
Today I am releasing a working paper describing the methodology in greater detail. The analysis attempts to translate the existing goods & services dichotomy into tangible & intangible.
Tangible activities are primarily physical; intangible are primarily mental. Cutting hair, ringing up a sale at a cash register, making a car, harvesting a crop–all of these are primarily a physical activity. The transaction involves the movement of atoms. Designing a poster, negotiating a deal, writing an article–these are primarily mental involving the manipulation of information bits.
Intangible, mental activities are more important than ever in this information economy. But tangible, physical activities are just as important. Some of those physical activities are captured by the current classification system as part of construction, agriculture and manufacturing. And some of those mental activities are correctly classified as services. But only some. For example, the construction sector contains many mental activities such as architecture, engineering and logistical planning. The service sector contains physical activities, such as truck drivers, barbers and gardeners.
I plan to refine the methodology and continue to publish monthly updates.