I'm a bit pressed for time this morning as I have to go to my son's third grade play, and then a busy day of work ahead. So just a couple of quick graphs exploring the increasing automation of the US economy. The graph above (from BEA table 1.5.5) shows all the components of non-residential investment in the economy as a percentage of GDP from 1950-2009. So this is the same period that the working-age male employment/population ratio has fallen from about 95% to about 80%.
You can see that while non-residential investment has generally run in the range of 9-12%, the mix has shifted over time, with ever more going on computers, networking equipment, software, etc, while less is going on industrial and transportation equipment.
The next graph shows the same data, only broken out as separate lines:
A few points that strike me:
- The structure line has two booms (associated with the early 80s S&L boom and crash, and the recent housing boom requiring associated non-residential investment).
- The information equipment/software (IES) line increases to a peak in the 2000 dot-com boom, and then falls back a little, but stays at a high level. The stuff goes obsolete so fast that it has to be constantly replaced.
- Note that the IES investment here is non-residential; this is spending by businesses on computers, software, and network/telecommunications equipment. It doesn't include consumer spending on personal computers, mobile devices, etc.
- IES investment was not depressed by the 2005-2008 oil price boom; instead, it was increasing very slightly in those years. This tends to argue against the idea that peak oil will cause de-automation.
- Although IES investment fell in the 2009 recession, it was much less sensitive to the recession than the other investment components. Look what happened to transportation equipment in 2009 by contrast! Presumably, businesses don't see this spending as optional or deferrable.
- Earlier recessions (1974, 1980-82, 1991) are also barely visible in the IES investment line.
If I had to guess, I would expect investment in IES to stay roughly flat as a fraction of the economy for the next few decades, neither growing massively, nor shrinking, but somewhere around the recent 4% level give or take a percentage point or so. Most of it will be driven by the replacement cycle, and as long as Moore's law continues, the lifetime of computer equipment will be roughly similar. A slowdown in Moore's law would lead to a lower level of IES investment as the stuff lasted longer.