When the Commerce Department reported this morning that the Gross Domestic Product rose 1.7% from April through June, the figure was 3% higher than expected — and that’s partly due to the change, MPAA chief Chris Dodd says in a blog post. The department’s Bureau of Economic Analysis revises its GDP calculation policies every five years, and this is the first time that it folded in R&D investments for creative work. It also revised its GDP numbers to incorporate the investments going back to 1929. That resulted in an average 3% bump, Dodd says, including $471B last year to bring the size of economic output to $16.2T. In Q2 this year investments in films, television shows, literature and music amounted to $75.3B. “For years, the BEA treated the money that was spent creating new entertainment works as current expenses — or costs of business,” Dodd says. “Therefore the film and television industry was captured in the GDP only downstream based on revenue generated by film and television products, and did not include the impact on the economy based on their investment.” Now the investments in film and TV are treated as intangible assets, not expenses. It reflects the new view that “Long after they’re first developed, these creations continue to retain their value and deliver residual benefits,” Dodd says.
Entertainment R&D Boosts Federal GDP Calculation Following Formula Changes
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