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Trivia Tidbit Of The Day: Part 145 -- Business Fixed Investment

Business Investment, As A Share Of GDP-

Business fixed investment has been robust during the past two years: since the first quarter of 2003, real business fixed investment has expanded at an average annual rate of nearly 11 percent—a pace that far exceeds such investment’s long-run average and is about the same as the average rate of growth during the investment boom of the late 1990s. In particular, real spending for equipment and software has been quite vigorous, climbing at an average annual rate of more than 13 percent since the beginning of 2003.

Source:
Congressional Budget Office (.pdf).

Business fixed investment is a good way to read how and what the "doers" of the economy feel about the economy. Notice how this important indicator began to drop off in 2000 and did not really recover until after 2002 midterm elections.

But since that point, growth in business fixed investment has been strong, indicating that although Americans tell pollsters they are down on the economy, the business community is investing for the future. Those making decisions on whether to purchase expensive business infrastructure (which typically improves productivity) believe it is worth it.

And even with the pessimistic polling data, most Americans (consumers, etc.) are behaving optimistically about the economy, whether or not they tell pollsters they are optimistic.

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Posted by Will Franklin · 21 August 2005 10:56 AM

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