Rewriting GDP History

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--Styx

Need more economic activity if you're in government? Then just change the numbers. This week the Bureau of Economic Analysis will revise historic GDP numbers upward.

The BEA will do so by capitalizing intangibles such as spending on research and development. Until this week, R&D has been viewed as an expense--a cost of creating the output that GDP is supposed to measure.

Under the new and improved GDP metric, such costs will now be considered 'investments' and added to GDP. Some other intangible added to GDP include the value of movie originals, long lasting TV programs, books, and sound recordings. Not the sales of these things, mind you, but their assessed and changing value of balance sheet assets.

These changes are estimated to add about 3% to historical GDP since 1929.

In a rare moment of bureaucratic candor, a BEA spokesman observed that the agency is "essentially rewriting economic history."

Practically speaking, this provides government with one more mechanism for fudging the numbers. All officials have to do label all federal spending program as an R&D investments, and then watch GDP soar.

After the historical data are changed, perhaps we'll learn that there was no Great Depression after all.