In a historic shift, the Bureau of Economic Analysis (BEA) says in July it will reconfigure the way it calculates government statistics in ways that will instantly make the U.S. economy appear 3% larger than it does presently.
“We are essentially rewriting economic history,” said BEA national accounts manager Brent Moulton.
According to the Financial Times, the BEA’s new methodology will include “billion of dollars of intangible assets” such as movie royalties and spending on research and development. The result will be the appearance of a boost in the size of the U.S. economy. The new statistical scheme will also affect “everything from the measured GDP of different U.S. states to the stability of the inflation measure targeted by the Federal Reserve,” reports the Financial Times.
“We’re capitalising research and development and also this category referred to as entertainment, literary and artistic originals, which would be things like motion picture originals, long-lasting television programmes, books and sound recordings,” said Moulton.
The rejiggered numbers are expected to make the GDP of New Mexico and Maryland appear to leap instantly 10% and 6% respectively. Whether voters will give lawmakers credit for the improved appearance of economic growth or discount the jump as simply a statistical mirage remains to be seen.
The BEA’s new calculation scheme will also include deficits in defined benefit pension plans.
“We will now show a liability for underfunded plans, which particularly has large ramifications for the government sector, where both at the state level and the federal level we have large underfunded plans,” said Moulton.