The final day of the week, the month, the quarter, and the first half of 2017 is on Friday.
And despite President Donald Trump’s key economic agenda item — tax reform — having gone nowhere, investors are looking at a stock market that is up 8% this year alone, as big tech stocks have lead the way.
(Though as Yahoo Finance’s Rick Newman reported Thursday, the failure of the GOP to get something done on healthcare makes tax reform more likely.)
Economic data, meanwhile, has been fine — if perhaps a big underwhelming — as we learned on Thursday the economy grew at an annualized rate of 1.4% to start the year.
On Friday, investors will pore over reports on personal income and spending, with this report also including the latest figures on “Core” PCE, the Federal Reserve’s preferred measure of inflation.
We’ll also get the final check on consumer sentiment from the University of Michigan on Friday morning, and recall that consumer and business confidence had been the most closely-watched data points in the wake of Trump’s election win.
R&D, trending up
A popular narrative surrounding the U.S. economy in recent years has been that we are mired in “secular stagnation” — or a lower growth trajectory — due to, among other things, a lack of innovation.
And while overall GDP growth rates certainly bolster the idea that economic growth in the modern U.S. economy is not the 4% or more we became accustomed to in the later half of the 20th century, there is still, despite some arguments, plenty of innovation happening across the economy. Or at least, folks are trying to make it happen.
Neil Dutta, an economist at Renaissance Macro, circulated the following chart on Thursday after the latest GDP revision was released. This chart shows that R&D, as a percent of GDP, continues to rise and, as a percent of GDP, is at levels not seen since the early 90s.
“Over the last year, private R&D spending has jumped 5.9% to 1.85% of US GDP, a record,” Dutta writes, adding that public sector R&D has also picked up, rising at a seasonally adjusted annualized rate of 6.1% in the first quarter.
“The continued improvement in R&D spending is one reason why we are upbeat on productivity growth,” Dutta writes.
“R&D spending is often cited as a source of productivity within firms, especially with respect to product innovation. R&D is also inherently risky as the payoff comes years in the future. If secular stagnation were widely believed by corporate America, why would R&D spending be rising this way?”
And as economists look to solve the puzzle of declining productivity in the economy, perhaps an increase in R&D portends the coming rise of something some had perhaps thought would never again appear in America: more productive workers.
Myles Udland is a writer at Yahoo Finance. Follow him on Twitter @MylesUdland
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