by New Deal democrat
The Atlanta Fed’s Macroblog has an interesting article today on whether a “high pressure” low unemployment economy leads to more capital investment. At least based on surveys, they answer in the negative, with companies pulling out the old chestnut of being unable to find qualified help “(at the wage we want to pay”).
But the article reports on one survey only, and does not delve into any long term historical data. So of cuorse I did.
Here’s what I found. Annual data on real private fixed nonresidential data, and U-3 unemployment, can both be found back to 1948.
The first graph compares the YoY% change in investment vs. the YoY% change in the unemployment rate:
There is a high correlation, but there is no apparent leading relationship. In fact they look coincident. At best it appears that investment continues to expand even as the unemployment rate holds steady in mature expansions.