US Economic Indicators: Capital Spending In Real GDP

US Economic Indicators: Capital Spending In Real GDP March 28, 218 Dr. Edward Yardeni 516-972-7683 eyardeni@ Debbie Johnson 48-664-1333 djohnson@ Please visit our sites at www. blog. thinking outside the box

Table Of Contents Table Of Contents Capital Spending 1-2 Equipment 3-6 Structures 7-9 Intellectural Property Products 1-11 Spending During Expansions 12-17 Private Nonresidential Fixed Investment 18 CEO Outlook & Capital Spending 19 March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

2 22 Figure 1. Capital Spending TOTAL (billion 9 dollars, saar) 2 22 17 17 1 1 12 12 7 7 2 2 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 6 5 5 5 4 4 4 4 3 3 3 3 2 2 1 1 Figure 2. STRUCTURES (billion 9 dollars, saar) 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 1 6 5 5 5 4 4 4 4 3 3 3 3 2 2 1 Page 1 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

1 1 Figure 3. Capital Spending EQUIPMENT (billion 9 dollars, saar) 1 1 9 9 8 8 7 7 6 6 4 4 3 3 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 8 7 7 6 6 5 4 4 3 3 2 1 Figure 4. INTELLECTUAL PROPERTY PRODUCTS (billion 9 dollars, saar) 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 8 7 7 6 6 5 4 4 3 3 2 1 Page 2 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

4 3 3 3 3 2 2 1 1 Figure 5. INFORMATION PROCESSING EQUIPMENT (billion 9 dollars, saar) Equipment 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 4 3 3 3 3 2 2 1 1 2 Figure 6. INDUSTRIAL EQUIPMENT (billion 9 dollars, saar) 2 1 1 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 3 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

3 3 Figure 7. Equipment TRANSPORTATION EQUIPMENT (billion 9 dollars, saar) 3 3 2 2 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 2 Figure 8. OTHER EQUIPMENT (billion 9 dollars, saar) 2 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 4 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

3 3 Figure 9. Equipment INDUSTRIAL & TRANSPORTATION EQUIPMENT (billion 9 dollars, saar) 3 3 2 Industrial Equipment 2 Transporation Equipment 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 4 3 3 3 3 2 2 1 1 Figure 1. INFORMATION PROCESSING & INDUSTRIAL EQUIPMENT (billion 9 dollars, saar) Industrial Equipment Information Processing Equipment 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 4 3 3 3 3 2 2 1 1 Page 5 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

122 12 82 62 Figure 11. Equipment COMPUTERS & PERIPHERAL EQUIPIMENT (billion 9 dollars, saar, ratio scale) 122 12 82 62 42 Computers & Peripheral Equipment (9.9) 42 22 22 2 92 93 94 95 96 97 98 99 1 2 3 4 5 6 7 8 9 1 11 12 13 14 15 16 17 18 19 2 2 3 3 2 Figure 12. OTHER INFORMATION PROCESSING EQUIPMENT (billion 9 dollars, saar) 3 3 2 2 2 1 1 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 6 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

6 5 5 5 4 4 4 4 3 3 3 3 2 2 1 Figure 13. STRUCTURES (billion 9 dollars, saar) Structures 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 1 6 5 5 5 4 4 4 4 3 3 3 3 2 2 24 22 Figure 14. COMMERCIAL & HEALTH CARE STRUCTURES (billion 9 dollars, saar) 24 22 18 18 16 14 16 14 12 12 8 8 6 6 4 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 4 Page 7 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

9 8 Figure 15. Structures MANUFACTURING STRUCTURES (billion 9 dollars, saar) 9 8 7 7 6 6 4 4 3 3 2 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 2 115 15 Figure 16. POWER & COMMUNICATION STRUCTURES (billion 9 dollars, saar) 115 15 95 85 95 85 65 65 55 55 45 45 35 35 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 8 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

2 Figure 17. Structures MINING EXPLORATION, SHAFTS, & WELLS STRUCTURES* (billion 9 dollars, saar) 2 1 1 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 * Includes petroleum and mineral exploration. Figure 18. OTHER STRUCTURES (billion 9 dollars, saar) 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 9 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

4 4 3 3 3 3 2 2 1 1 Figure 19. Intellectural Property Products SOFTWARE (billion 9 dollars, saar) 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 4 4 3 3 3 3 2 2 1 1 3 2 2 Figure 2. RESEARCH & DEVELOPMENT (billion 9 dollars, saar) 3 2 2 1 1 1 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 1 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

9 8 Figure 21. Intellectural Property Products ENTERTAINMENT, LITERARY, AND ARTISTIC ORIGINALS (billion 9 dollars, saar) 9 8 7 7 6 6 4 4 3 3 2 2 1 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 1 Figure 22. IT EQUIPMENT, SOFTWARE, and R&D (billion 9 dollars, saar) 4 4 3 Research & Development (293.2) Software (382.6) Information Processing Equipment (389.7) 3 6 62 64 66 68 7 72 74 76 78 8 82 84 86 88 9 92 94 96 98 2 4 6 8 1 12 14 16 18 2 Page 11 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

9 Figure 23. Spending During Expansions TOTAL (percent changes from business cycle troughs*) Data updated thru -217 9 8 7 6 4 9 (44.8) 1 (6.8) 1991 (94.4) 1982 (36.5) 19 (49.1) 197 (67.1) 1961 (93.7) 9 8 7 6 4 3 3 2 2 1 1-1 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. The short 12-month recovery from July 198 to July 1981 is excluded. -1 7 6 Figure 24. STRUCTURES (percent changes from business cycle troughs*) Data updated thru -217 7 6 4 3 2 9 (4.7) 1 (-24.4) 1991 (13.7) 1982 (-5.) 19 (33.4) 197 (29.8) 1961 (52.7) 4 3 2 1 1 9-1 -1-2 -2-3 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -3 Page 12 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

16 14 Figure. Spending During Expansions EQUIPMENT (percent changes from business cycle troughs*) Data updated thru -217 16 14 12 8 9 (8.6) 1 (8.6) 1991 (139.3) 1982 (44.3) 19 (48.) 197 (93.3) 1961 (124.8) 9 12 8 6 6 4 4 2 2-2 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -2 11 9 8 7 6 Figure 26. INTELLECTUAL PROPERTY PRODUCTS (percent changes from business cycle troughs*) 9 (37.7) 1 (32.) 1991 (13.) 1982 (13.1) 19 (93.2) 197 (66.9) 1961 (95.6) Data updated thru -217 11 9 8 7 6 4 9 4 3 3 2 2 1 1-1 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -1 Page 13 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

36 34 32 3 28 26 24 22 18 16 14 12 8 6 4 2 Figure 27. INFORMATION PROCESSING EQUIPMENT (percent changes from business cycle troughs*) 9 (58.2) 1 (61.) 1991 (327.8) 1982 (126.1) 19 (2.9) 197 (242.9) 1961 (23.) Spending During Expansions Data updated thru -217-2 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. 9 36 34 32 3 28 26 24 22 18 16 14 12 8 6 4 2-2 1 14 13 12 11 9 8 7 6 4 3 2 1 Figure 28. INDUSTRIAL EQUIPMENT (percent changes from business cycle troughs*) 9 (52.7) 1 (-12.5) 1991 (46.) 1982 (12.5) 19 (-.9) 197 (38.9) 1961 (96.9) Data updated thru -217-1 -2 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. 9 1 14 13 12 11 9 8 7 6 4 3 2 1-1 -2 Page 14 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

43 38 33 28 23 18 Figure 29. TRANSPORTATION EQUIPMENT (percent changes from business cycle troughs*) 9 (33.7) 1 (-29.8) 1991 (12.3) 1982 (15.5) 19 (29.) 197 (15.9) 1961 (144.2) Spending During Expansions Data updated thru -217 9 43 38 33 28 23 18 13 13 8 8 3 3-2 -2-7 -7-12 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -12 9 8 7 6 4 Figure 3. OTHER EQUIPMENT (percent changes from business cycle troughs*) 9 (45.1) 1 (7.2) 1991 (55.1) 1982 (13.3) 19 (1.5) 197 (55.4) 1961 (.5) Data updated thru -217 9 9 8 7 6 4 3 3 2 2 1 1-1 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -1 Page 15 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

4 3 3 2 Figure 31. SOFTWARE (percent changes from business cycle troughs*) 9 (49.9) 1 (46.7) 1991 (29.2) 1982 (354.8) 19 (.7) 197 (216.7) Spending During Expansions Data updated thru -217 4 3 3 2 1 1 9 - III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. - 12 11 9 8 7 6 Figure 32. RESEARCH & DEVELOPMENT (percent changes from business cycle troughs*) 9 (28.) 1 (19.3) 1991 (39.) 1982 (63.) 19 (66.7) 197 (43.) 1961 (18.) Data updated thru -217 12 11 9 8 7 6 4 4 3 9 3 2 2 1 1-1 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -1 Page 16 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

9 8 7 6 4 Figure 33. 9 (27.5) 1 (.5) 1991 (51.9) 1982 (38.7) 19 (91.2) 197 (67.1) 1961 (18.3) Spending During Expansions ENTERTAINMENT, LITERARY, & ARTISTIC ORIGINALS (percent changes from business cycle troughs*) Data updated thru -217 9 8 7 6 4 3 2 9 3 2 1 1-1 III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II III IV I II 9 21 211 212 213 214 215 216 217 * Troughs based on National Bureau of Economic Research, US Business Cycle Expansions and Contractions. -1 Page 17 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

7 6 Figure 34. Private Nonresidential Fixed Investment CAPITAL SPENDING: STRUCTURES, EQUIPMENT, & INTELLECTUAL PROPERTY (as a percent of nominal private nonresidential fixed investment) 7 6 4 3 Structures Equipment Intellectual Property 4 3 2 2 1 1 47 49 51 53 55 57 59 61 63 65 67 69 71 73 77 79 81 83 85 87 89 91 93 95 97 99 1 3 5 7 9 11 13 15 17 19 21 Page 18 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

14 Figure 35. CEO Outlook & Capital Spending CEO ECONOMIC OUTLOOK & CAPITAL SPENDING IN NOMINAL GDP 2 12 Q1 15 8 1 5 6 4 2 CEO Outlook (>=expansion) Capital Spending (yearly percent change) -5-1 -15-2 3 4 5 6 7 8 9 21 211 212 213 214 215 216 217 218 219 Source: Business Roundtable, Bureau of Economic Analysis, and Haver Analytics. -2 Page 19 / March 28, 218 / US Economic Indicators: Capital Spending During Expansions www.

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