{
  "id": 5352609,
  "title": "Gross and Net US Investment",
  "url": "https://urgent.news/2026/09/03/gross-and-net-us-investment",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-09-03T15:00:00.000Z",
  "source": {
    "name": "Conversable Economist",
    "slug": "conversable-economist",
    "url": "https://conversableeconomist.com/2026/09/03/gross-and-net-us-investment/"
  },
  "original_language": "en",
  "account": "Each year, over half of all investment made by US firms simply serves to replace older equipment and knowledge that has become worn out. Recently, the figure has risen to approximately 75% of current investment, which is simply used to offset the depreciation of older capital. A graph from the Federal Reserve Bank of St. Louis's FRED website illustrates this concept. The top line displays gross investment, while the bottom line shows \"net\" investment, which accounts for the depreciation of older capital. As evidenced by the shaded bars indicating economic recessions, firm investment tends to decline during these periods. During the depths of the Great Recession in 2009, all of the gross investment was directed towards replacing depreciated capital, resulting in no growth in the overall US capital stock.\n\nAnother figure divides net investment by gross investment. In the 1970s, net investment was typically around 40% of gross investment; however, this proportion has been declining over time. For the past decade or so, net investment has equated to approximately 25% of gross investment, meaning that 75% of the gross investment is merely replacing depreciated capital, while only 25% is adding to the capital stock.\n\nThe increasing gap between gross and net investment can be attributed to the fact that modern investment is increasingly focused on information technology rather than large physical machinery. Information technology tends to depreciate more rapidly, necessitating more frequent replacement and updating. This trend implies that achieving a given increase in net investment now requires a larger rise in gross investment compared to several decades ago. Additionally, the US has not historically been an economy characterized by high investment levels.",
  "summary": "Each year, more than half of the total or gross investment by US firms just makes up for depreciation in older equipment and knowledge. in recent year, it’s more like 75% of current year investment just offsets depreciation. Here are the figures from the ever-useful FRED website run by the Federal Reserve Bank of St. … Continue reading Gross and Net US Investment The post Gross and Net US…",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}