This is one of the components of GDP. Comment.
Update
Here’s the natural log of the GPDI over the same period:
Gross Domestic Private Investment
April 9, 2013
This is one of the components of GDP. Comment.
Update
Here’s the natural log of the GPDI over the same period:
A few things:
1) Either companies are very short sighted or the credit crunch was severe enough during the recession that companies that had good foresight (to plan new investment) couldn’t get financing lined up.
2) It seems that after the oil crisis recession, you start to see an increase in rate, followed by another after the early 80s recession, and even more following the 1991 recession. It seems after every recession, the rate of investment goes up. This is a (the?) source of “jobless recoveries.”
3) Having said that, one company’s investment is another’s purchase order of something – I wonder how many of these investment dollars go towards ‘made in USA’ products? (More of a curiosity than a serious economic question)
I think that’s a better argument than the technology argument in this instance. Also compare that with retail sales. Or with the more general personal consumption expenditures.
Isn’t investment and technology complimentary? As in, I run a factory, I employ X workers on Y machines. When orders pick up after a recession, I can purchase higher-tech machines that give me more production per worker – meaning I don’t have to hire more workers when orders pick up. The technology behind the machinery can be new or old – but it’s “new to my factory,” which is what matters.
What’s usually said is that capital investment and labor are complementary.
Can you do this in a log scale? My first thought is that if you chop off the peak at 2000, and eliminate half of the 2000s peak to account for the real estate bubble, then we are a bit behind where we should be, but not that far off. We just werent as rich as we thought we were.
Steve
Don’t mind me…..
Oh, hi steve!
:p