In The News: Measurement of GDP is Revised

2017-12-20T17:34:12+00:00 July 30th, 2013|Categories: In The News|Tags: , , , , |

Gross Domestic Product (GDP) is the broadest measure of economic growth. The major components of GDP include private consumption, gross investment, government spending, imports, and exports. To keep up with the times, the government adjusts its measurements periodically, but the changes usually are minor. This year, however, will see the most signficant reclassification since 1999. Beginning with tomorrow's second quarter report, GDP will now include spending on research and development, some forms of entertainment, transfer fees related to home sales, and a new treatment of pensions. The changes are estimated to add about $400 billion to the size of the roughly $16 trillion US economy. Prior data will be revised to reflect the changes all the way back to 1929. As a result, the changes are not expected to have much impact on the growth rate of the economy.