Fixed Investment as a Share of GDP Since 1993
Andrew Samwick notes:
That we are not in a recession, based on weak GDP growth and a host of other macroeconomic indicators that have been flat since last summer, is quite remarkable … Note that the fall in residential investment has been just as large and even steeper than the decline in equipment and software investment that was the driver of the last recession. Equipment and software investment fell to and has hovered around the share of GDP that it was in 1993. Residential investment has fallen to that level. It’s not clear when the fall will stop.
Our graph shows total fixed investment as a share of GDP as well as its components including residential investment, investment in equipment and software, and investment in non-residential structures. Total fixed investment boomed in the 1990’s but collapsed from 2001 to early 2003 when it bottomed out at 14.8% of GDP. By 2006QI, it had recovered to 16.8% of GDP by 2006QI. Last quarter, however, it had fallen to less than 14.5% of GDP.
During the investment collapsed from 2001 to 2003, the residential investment boom partially offset the collapse or investment in equipment and software. Investment in equipment and software is still weak and residential investment has itself collapsed. It would seem that the alleged Bush investment boom never exactly got roaring and now is sort of dead. But you’d never know this if you listened to this clown.