June 2025: 1.32% (B- grade)

Federal inventionINDEX June 2025: 1.32% (B- grade)

The inventionINDEX measures innovation output by comparing GDP growth with patent production growth.

Anything over C grade is positive sentiment; anything under C is negative outlook/sentiment. Using that sentiment, it is possible to observe trends over time, and also compare states/countries. In doing so, we can predict which states have the best chance to recover economically from the pandemic (or any other economic incident that may occur).

The Federal inventionINDEX score for June 2025 stands at 1.32%, marking a slight decline from May’s 1.51% and April’s 1.58%. While this dip may appear marginal, it follows a broader trend of fluctuating innovation activity over the past year. Compared to its position a year ago in June 2024, when the score was 1.47%, the current figure reflects a modest year-over-year decrease. Such variability suggests that federal innovation momentum, while steady in some months, lacks the consistency seen in more robust cycles of inventive output.

A positive takeaway is that even at 1.32%, the score remains within a competitive range when compared to historical benchmarks. For example, the index was significantly lower in November 2024, when it dipped to 1.22%. The ability to maintain scores above 1.3% for most of the last twelve months indicates a foundational level of inventive activity that has not drastically weakened. This relative resilience can be attributed to continued federal research funding, institutional support for patent generation, and stable engagement from federally supported research bodies.

A higher inventionINDEX score typically correlates with increased patent filings, stronger R&D outputs, and a greater likelihood of public-private technology transfers. These conditions can lead to economic stimulation, job creation, and heightened global competitiveness in key technological sectors. Additionally, when federal institutions demonstrate innovation leadership, it encourages collaboration with academic and private sectors, potentially accelerating breakthroughs in emerging fields like clean energy, AI, and biotechnology.

Conversely, a lower score may signal waning momentum in innovation pipelines. This could reflect tightening budgets, delayed research cycles, or a reduction in high-impact filings from federally affiliated entities. Persistent dips may erode the perceived leadership role of the federal government in national innovation, potentially shifting focus and resources to state-level or international innovation centers. To mitigate these risks, it is important for federal agencies to analyze the drivers behind each score movement and address any structural or strategic gaps limiting inventive capacity.

Discussion:

In June, the Federal inventionINDEX scored a positive sentiment which was lower than the previous year’s average and underperformed the downward trend for the year. This is similar to the prior 12 months, which experienced a slight downward trend.

As the economy continues to stabilize in the post-pandemic era, it remains uncertain whether any backlog of applications still exists or if the department has returned to normal processing timelines. The inventionINDEX could also be affected by lingering consequences from the pandemic, such as company closures, reduced workforces, and limited R&D capabilities, which may still be impacting current operations.

Learn More:

Are you thinking of patenting any of your bright ideas? Did you know your research work could be eligible for the R&D Tax Credit and you can receive up to 14% back on your expenses? To find out more, please check out our free online eligibility test.

Feel free to book a quick teleconference with one of R&D tax specialists if you would like to learn more about R&D tax credit opportunities.

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