ECONOMIC REPORT OF THE PRESIDENT

any shift from consumer-paid media to ad-supported media would show
up as a decline in output.
Open-source software is an example of an even more daunting
measurement challenge because, in many cases, it is both acquired and
produced for free.3 One way to estimate the real investment of firms in
open-source software is to use the “near-market good” approach from
Nordhaus (2006). It is less clear how much more GDP growth is missing
in recent years due to open-source software, but the expansion of online
platforms providing these goods suggests a growing measurement issue.
Taken together, it appears that the official statistics have always
missed some GDP growth, and it is possible that the bias has worsened
some in recent years, though not by nearly enough to explain the
slowdown in productivity growth or the mismatch between labor and
product market growth. Some of the measurement problems, particularly
those related to quality-adjusted prices of high-tech goods, appear
to have worsened lately. Still, the contributions to GDP and productivity
growth from this mis-measurement are relatively modest, while mismeasurement
in larger, hard-to-measure sectors like health care merit
further in-depth study.
3 BEA measures “own account” software based on an estimate of wages paid to computer
programmers and system analysts (see NIPA Handbook p. 6-29). To the extent that
employers are paying programmers to produce open-source software, it will be included
in BEA’s investment and GDP numbers. However, unlike traditional “prepackaged”
software, open-source software does not generate investment from the sale of copies, so less
investment is captured in GDP with the open-source approach than with traditional sales of
prepackaged software.
quarters of 2015, above the 5.1-percent growth in 2014 and far faster than
overall real GDP growth of 1.8 percent in 2015. While the cyclical recovery
in the housing market is well underway, several structural challenges
remain, including a constrained housing supply, low affordability in some
areas of the country (see Box 2-6), and persistently muted household formation
for 25-34 year-olds. These challenges may explain why some aspects of
the housing market or areas of the country have yet to recover.
House prices continued to rise in 2015, similar to the pace in 2014 but
below that of 2013. National home prices increased between 4 and 7 percent
(depending on the index) during 2015, broadly in line with growth in 2014
but well below the rapid growth in 2013. Nominal house prices are between
19 and 36 percent above their recessionary trough and between 5 and 7
percent below their pre-recession peak (Figure 2-19). However, in real terms
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