Capital and Labor in the U.S. Economy
Producing the nation’s output requires the use of capital and labor services. The quantity, types, and organization of capital goods (structures and equipment) and labor services determine the economy’s total output. Hence, growth in the number of these inputs, and improvements in their quality and organization in firms and households, expand productive capacity. The economy’s capital goods may be classified into two types—equipment that depreciates rapidly, like computers and machines, and structures that are relatively long-lasting, like buildings and airports. Each category may be subdivided by ownership into production capital owned by firms—for example, nonresidential buildings and computers for automated manufacturing— and consumption capital owned by households—for example, houses for shelter and computers for surfing the Internet.
Suggested citation: “Capital and Labor in the U.S. Economy,” Federal Reserve Bank of Cleveland, Economic Trends, no. 98-02, pp. 15-16, 02.01.1998.