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Durable Equipment Investment

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During the 1990s, nonresidential fixed investment (producers' durable equipment plus nonresidential structures) has surged. The increase can be traced to durable equipment sales, with 57% of all fixed investment gains coming from computer and peripheral equipment purchases. However, durable equipment sales began to grow long before computer sales became significant. Since 1970, durables investment has increased from 53% to 75% of total nonresidential fixed investment. Over the same period, the relative price of durables has fallen 42% and the relative price of structures has climbed 13%. The drop in durables' prices, accompanied by an increase in their share of total investment, indicates that investment patterns have been dominated by supply side factors.

Suggested citation: “Durable Equipment Investment,” Federal Reserve Bank of Cleveland, Economic Trends, no. 97-08, pp. 11, 08.01.1997.

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