Value Added: Information

Think of it this way

It is the economy that weighs nothing and is worth a lot.

What is Value Added: Information?

Software, cloud services, telecommunications, media and publishing. It is the sector home to the country's largest companies by market capitalization.

How to read Value Added: Information

It weighs much less in GDP than it does in the stock market, and that gap is the interesting point: a sector's market value does not measure its size in the real economy.

What Value Added: Information means for the market

It is the best reminder that the index and the economy are not the same thing. A sector that contributes a small fraction of GDP can move the entire S&P.

Where the money flows

GDP can be measured in three ways that give the SAME figure: by spending (who buys), by production (who makes it) and by income (who earns it). This version uses the second: the value added of each industry, which is what it produces minus what it bought from others to produce it. Subtracting those purchases is what avoids counting twice the steel that goes into a car. The “By spending” version of the same chart splits the total the other way, which is why none of its lines match these: they do not measure different things, they divide the same thing differently.

What to watch in Value Added: Information

Compare its share here with its share in the Nasdaq. The difference explains why the stock market and GDP can go their separate ways for years.

It does not measure liquidity: it is the part of GDP produced by this sector.