From the course: Economics for Everyone: Understanding a Recession
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Business investment
From the course: Economics for Everyone: Understanding a Recession
Business investment
- Aside from consumer spending, the second most important part of economic growth is business investment, and business investment isn't you or I buying stocks in companies, it's not that kind of investment. It's the investments that business make to help them grow. They might buy forklifts or build a new warehouse or they may invest in robots or other kinds of equipment. Those kinds of investments, that's business investment. That's about 15 to 20% of the U.S. economy and it tends to swing really big during recessions to the downside and quite big to the upside when the economy is expanding and growing. If we think about the entire economy, 70% of it's consumer spending, and in the United States, that's 330 million-plus people who are making consumption decisions about what they're going to buy. But if we think about the business investment piece, that 15 to 20% of GDP, there's only a handful of CEOs and executives…
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