Capital investment activity at non-corporate businesses has been declining for the past decade, data from the Federal Reserve’s Flow of Funds report shows. Between 2000 and 2011, the latest year data are available, the average non-corporate non-financial business reduced its gross fixed capital formation by one-third, when measured in inflation-adjusted terms.
This decline is troubling. Investment in machines, office equipment, vehicles, software, and other fixed assets helps companies to boost their productive capacity. A lower average level of investment means that businesses are investing less in plant and equipment than they used to.
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