It’s like a report card for the economy.

Late last month, the Bureau of Economic Analysis (BEA) of the U.S. Commerce Department released the latest information on our country’s gross domestic product (GDP) growth for the three months ended in September. 

#-ad_banner-#As with all economic report cards, investors await this report eagerly and read it closely, looking for clues about the nation’s economic health. Of course, the main idea is to give us a sense of how fast the economy can grow and whether it’s been doing better or worse than in previous quarters and years. But investors also look for details on where the growth comes from and how well the U.S. economy is positioned to continue economic progress. 

The GDP report also provides hints about overall economic and industry trends. But perhaps the biggest question on investors’ minds these days is whether — and when — the Federal Reserve will raise interest rates. 

While third-quarter GDP increased at an annualized rate of 2.9% (which was much better than the 2.5% that most economists had expected), much of the growth stemmed from one-time factors. 

For instance, a build-up in inventories accounted for 60 basis points of that growth. On the one hand, it’s a good thing. Inventories had been shrinking for five consecutive quarters. On the other hand, accumulation in inventories means that goods were produced but not sold. 

Here’s the bottom line: Despite the strong “headline” number, I believe the report was neutral in terms of influencing a Fed decision about interest rates. 

That doesn’t mean I was disappointed with every number I saw, though. For my subscribers and I at my premium newsletter Game-Changing Stocks, the most important figure is spending on research and development, or R&D. 

Why is this important? It’s simple. I don’t believe there is another single factor that influences productivity, economic growth and future innovations as much as R&D spending does. In this sense, an improvement in R&D spending is necessary for the very future of innovation in the United States. 

And on that front, R&D spending jumped by an annualized rate of 17% in the third quarter. 

That’s good news when your business is searching for companies that are creating innovative new products and redefining industries — which in turn lead to massive gains for investors.

Take a look at the chart below…

The BEA measures this spending because expenditures for research and development provide long-lasting service to businesses, nonprofit institutions and government agencies. These expenditures have many characteristics of other fixed assets, because ownership rights can be established and they are long-lasting and repeatedly used in production processes. 

As a result, growth in private fixed investment is a good benchmark for future innovation growth in the overall economy, and we can remain optimistic about the overall trends here. And it’s very good news for the prospects of the overall economic growth: The heart of R&D spending is the pursuit of new knowledge and intellectual property that will end up as the core of new technologies and products. 

Of course, every company we deem a game-changer in my newsletter also defines its future by its own intellectual efforts, which we can measure by the amount and, more important, the efficacy, of its R&D own spending. 

In upcoming issues, I will pay particular attention to individual companies’ R&D — with an emphasis on efficiency. You’d be well served to do the same. 

This month, I’m just happy that the U.S. economy is generally getting this type of spending right, which should ensure the stream of innovation that has made our country strong and competitive will continue. 

As a result, I’m confident my subscribers and I will be able to find a steady stream of strong game-changing candidates. These companies will be thriving tomorrow on the R&D spending of today. In other words, they’re the growth stocks you need to add to your portfolio immediately.

It’s this type of pick that makes up the bulk of what I offer to my subscribers in Game-Changing Stocks. 

For example, a stock I recommended in late August has experienced gains of over 17% since that time. An innovator in business management software for the wellness and health industry, this company has only reached about one percent of its potential market. It goes without saying that this is only the beginning for its growth. 

I’ve already offered another, similar pick, to my subscribers this week. To learn more about my Game-Changing Stocks newsletter and how to spot future innovators, click here.