The Investment Drought Is All About Buildings

This isn’t really apropos of any big argument I have to make, but I threw together this chart decomposing real private fixed investment into its three elements for the years where data is available. You can see here that equipment and software, though definitely riding the ups-and-downs of the business cycle, seems basically healthy.

It’s real estate where investment has collapsed. It’s particularly egregious with residential investment, but non-residential structures are also at a very low level. That’s especially noteworthy because it’s well-known that we’ve been experiencing something of a boom in oil and gas extraction and you can’t drill for oil without some structures. The traditional malls-and-offices workhorses of non-residential structure-building are in terrible shape.