Revising GDP to Include intangible assets?
So admittedly this is on exposes our inner “valuation geek” ethos, but this FT article on pending GDP methodology revisions caught our eye. (Typing that sentence made my eyes roll. Definitely evidencing the valuation geek ethos…)
So as it stands, GDP is currently calculated by including R&D expenses as a “cost of goods sold.” The new method contemplates capitalizing those expenditures- and will have an overall +3.0% impact on calculated GDP. Interesting, right?
What’s perhaps even more interesting is the effect that it has when looking at is on a state by state basis:
GDP will soar in small states that host a lot of military R&D, but barely change in others, widening measured income gaps across the US. R&D is expected to boost the GDP of New Mexico by 10 per cent and Maryland by 6 per cent while Louisiana will see an increase of just 0.6 per cent.
Pretty interesting, right? And a bit circular… that growth in the defense states is obviously tax payer funded.