Our Aging Capital Stock

by: Michael Mandel

If things feel more decrepit and worn-out these days, it’s because they are. The average age of the U.S. capital stock is at a 40-year high in all three major categories: nonresidential, residential, and government. Take a look at this chart:

One unpleasant surprise after another, from the top down.

  • The age of the residential stock is at its highest level in 40 years, despite the mammoth building boom of the 2000s.
  • The age of the government capital has steadily risen over the past 40 years, suggesting great underinvestment in public infrastructure.
  • The age of the private nonresidential capital stock has risen more or less steadily since the early 1980s, with a slight dip in the New Economy boom of the 1990s.

Let’s break it down by industry. This chart shows the change in the average age of the capital stock since 2000.

It’s kind of an odd and surprising picture. The sectors which got younger were mining, farming, and transportation. The information sector, which was supposed to be leading the economy, had the biggest rise in average age. That’s because we just weren’t investing enough in information technology over this stretch to make up for the aging of the old physical infrastructure.