Last week, the Washington region's economy got at least $7 billion bigger.

It wasn't because of an overnight growth spurt, of course.

What happened was a critical change in the way government economists factor in the importance of computer software in the production of goods and services.

By giving much greater recognition to software's contribution to business productivity, the Bureau of Economic Analysis wound up raising its estimates of the nation's total output of goods and services over the past decade.

Translating those changes to the Washington area increased the size of the regional economy in 1998 to at least $210 billion instead of the $203 billion that we thought was in the pot, according to estimates by George Mason University Prof. Stephen S. Fuller.

"It's not new money," Fuller said. "We had it all along. We just didn't know it."

Mark Zandi, chief economist at RFA Dismal Sciences, a West Chester, Pa., research firm, said the higher estimates of the region's wealth are bringing the numbers in line with the reality.

"I think people feel that deep down, things are even better than the statistics say they are," Zandi said. Until several months ago, consumer confidence was at record heights and is still very strong, he added, but the official estimates of economic activity weren't matching confidence levels.

"The wealth was there, we just didn't measure it as well as we should," Zandi said.

Until last week, computer software was considered an ingredient that goes into the ultimate output of a business, like the paper this newspaper is printed on, or the steel that goes into an automobile.

To keep from overcounting the economy's output, the Commerce Department's Bureau of Economic Analysis (BEA) considers only goods and services that are produced for final consumption or use, not the ingredients.

In revising its figures, the bureau recognized that businesses and governments purchase software intending to use it for several years at least.

"It's similar to the investments they make in plants and equipment and we should treat it the same way," said Brent R. Moulton, a top BEA economist. The change puts software in the same category as the computers and printing presses at this newspaper, for instance, and it adds to the total output of the economy, he said.

The upward revisions aren't huge. Fuller has calculated that the Washington metropolitan area economy grew from $196 billion in 1997 to $203 billion last year. If you add the new economic activity that comes from the BEA's calculations, the Washington economy measures $201 billion in 1997 and $210 billion last year.

But the year-to-year increases, added together, mean that a lot more wealth has been generated in the Washington area than economists formerly thought, Fuller said.

And the BEA statistics probably understate those gains, he and Zandi agree.

That's because there's a much larger concentration of technology in the Washington area, for its size, than in the nation as a whole.

Software and data processing workers fill 1.3 percent of all jobs nationally, but 4.9 percent of the jobs in the Washington area, nearly four times more.

So by the time the BEA's changes are fully factored into the Washington area's picture, the size of the region's economic pie will be larger still.

Just remember, you've already eaten it.

Faster-Growing Economy

The region's economy was at least $7 billion larger in 1998 after including software sales, according to new calculations based on a Commerce Department analysis.

SOURCES: Regional estimates by Stephen S. Fuller, George Mason University; Growth calculations from Commerce Department's Bureau of Economic Analysis