The Idea Economy
What do you think?
It’s time to take our final look at GPDI. Similar to the way we drilled into the various components of services, there are a lot of underlying factors that make up GPDI. However, unlike with good and services, we won’t break them down into sixteen separate items because they aren't nearly as material. What I’m saying is, I could, but I just think the analysis would be even more boring than what we are about to look at here. So, given my interest in topics most consider boring, that’s really saying something.
So, let’s take a look at the three biggest factors that make up the nonresidential portion of GPDI, which was the biggest item in yesterday’s post:
The line at the top is equipment, which are things like computers, or tractors, or machines that make whatever stuff would be counted amongst the stuff counted by GDP. Physical stuff. And, while I didn’t put a fancy trend line on the chart (I believe in your ability to imagine one!!), there is a clear downtrend starting just before the 1980s as businesses have been investing in less physical stuff as portion of total GDP.
The darkest line is structures, which had an interesting interaction with equipment during the crisis between 2007-2009, when equipment crashed and structures spiked up. Net between the two, there wasn’t a lot of movement but that shift in business investment is just one of many weird events during that tumultuous time in the economy.
Then there is intellectual property, which is the lightest line that starts small but is well on its way to surpassing even equipment! It’s crazy to think that almost 5% of all economic output is now just ideas. Not hard physical you-can-touch-it things like a kombucha dispenser but intellectual property. Given how important it is to the economy, it’s clear why the theft of intellectual property is a pressing issue.
Thats all for GPDI! So, next we can move onto the smallest (yet super important) of the four main GDP factors - trade.
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