It follows that if real GDP is understated, then Exhibit 14: US Technology Price Indices what appears to be a slow recovery is not as slow The implausible gap with hardware suggests IT and as reported and what appears to be a period of low communication price indices are likely overstated. productivity growth is not as low as reported. a eA We believe that the evidence favors the 140 —— Software . = = — — Hardware (Computers and Peripherals) mismeasurement argument. At a September 2016 100 Gonmunientions Eyuiomnent Brookings Institution conference on productivity, ther IT Equipment m4 Martin Feldstein, Harvard professor and president 100 —<————™ emeritus of the National Bureau of Economic \ “0 Research, also concluded that “the official statistics * % substantially underestimate the real growth 80 \ of output” after studying the methods used to % measure price indices.*° " ‘SL We point to three examples to illustrate the 20 i ae mismeasurement argument. First, our colleagues in WUT eee nen nnn nena Goldman Sachs’ Global Investment Research (GIR) “195 1997 1999 2001-2003 ©2005 «2007 «2009 2011-2018 2015 have pointed out that the official price indices for nate trough 2016 information and communication technology show Note: Other IT Equipment represents medical and non-medical equipment and instruments. an implausible gap between the price deflation in Acai Strategy Group, Goldman Sachs Global Investment Research, Bureau of computers and that in communications equipment, software and other IT equipment (see Exhibit 14). They question how “a given dollar outlay now from 50 cents to zero for smartphone users; 1.6 buys about 10 times as much computer in real trillion photos that would have contributed $800 terms as 20 years ago, but it only buys about 10% _ billion to GDP have no impact on GDP in the more software.”*! current framework. GDP has declined since camera Our colleagues’ conclusion that the and film sales have fallen without a commensurate official price