Since its introduction to the U.S. Senate floor in 1934, gross domestic product has been one of the most trusted measurements of a nation's macroeconomic health. Yet as the business models which populate the country's economy have expanded and evolved in the interceding 80 years, critics have started to question the validity of the metric.
In acknowledgement of the nation's broader shift toward a knowledge-based economy, the Department of Commerce's Bureau of Economic Analysis categorized intellectual property products as fixed investments - as opposed to capital expenses - for the first time last month. Such "products" consist of research and development funding, invention royalties and proprietary software.
McKinsey & Company consulting executives Jacques Bughin and James Manyika attempted to contextualize this encouraging development via e-commerce examples.
"Amazon.com's development of an internal search process that promotes recurring sales or the efforts of Netflix to fine-tune personal recommendations to increase video viewing and retain customers are certainly more than expenses," the pair wrote for the consultancy's quarterly publication. "Such capabilities, which are complex to build and replicate, can often help companies create enduring competitive strengths."
As The Wall Street Journal noted, the statistical revisions added nearly $560 billion to the U.S.'s 2012 GDP. While some may consider these adjustments a cynical attempt to paint a rosier economic outlook, most experts insist that this metric modernization was a long-overdue reinforcement to the measurement's relevance.