How did the overall level of reported GDP change as a result of the BEA's finally including research and development (R&D) and also arts and entertainment (A&E) production as part of U.S. GDP?
Here, both R&D and A&E are now being accounted for by the BEA as fixed assets rather than as intermediate components of producing goods and services, which effectively boosts the reported level of GDP.
To find out, we first converted the pre-revision data from being in terms of inflation-adjusted, chained 2005 U.S. dollars to be in terms of inflation-adjusted, chained 2009 U.S. dollars, which we've presented as the green line in our chart below. We next charted the newly revised real GDP figures being reported by the BEA as the black line, then drew lines between the various quarterly data points to help visualize how much the data changed from the previous revision.
In this chart, which presents all of the BEA's quarterly data for GDP from the first quarter of 1947 through the first quarter of 2013, we find that R&D and A&E production had very little impact on GDP up until 1983, when it finally reached a share of 1% of real GDP. Ten years later, that share of GDP had doubled, and through the first quarter of 2013, has now reached a share of 3.5% of the real U.S. economy.
Our next chart focuses on the data since the first quarter of 2000.
The main news for this period is that with the revision, the 2007 recession was not as deep as previous data indicated, and the recovery was somewhat stronger.
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