intangible investments added to economic numbers



WASHINGTON (Reuters) - As many a former factory worker can attest, U.S. companies have invested so heavily in technology that some plants now practically run themselves.

So it is rather odd that official data suggests American businesses for decades have been growing less aggressive at investing in their operations.

This apparent contradiction helps illustrate a rethinking under way on how to measure economic output, a discussion that is leading to an overhaul of government data this week that will show the U.S. economy is a bit larger than previously thought.

The idea is that while companies might be spending less of their income on tangible things like buildings and equipment, they appear to be spending more than ever on ideas, such as the engineering research behind an automated factory.

Private spending on research and development has roughly doubled as a share of investment in the last 50 years. The thing is, it doesn't actually count as investment, so America's output of cancer drugs adds to economic growth but the research to develop them does not.

This will change on Wednesday when the Commerce Department releases decades of revised data that will include R&D as a category of investment. Under the new framework, R&D added about $300 billion to GDP in 2010.
it's a case where the numbers lie due to the drop in cost of technology. Despite investing more in terms of equipment, the cost of said equipment is lower than costs in the past, giving the impression of less investment while simultaneously ushering in the age of automated employees free of the pesky human element.