SEPTEMBER 2003 U.S. DEPARTMENT OF COMMERCE Donald L. Evans, Secretary ECONOMICS AND STATISTICS ADMINISTRATION ECONOMICS Kathleen B. Cooper, Under Secretary for Economic Affairs AND STATISTICS ADMINISTRATION BUREAU OF ECONOMIC ANALYSIS J. Steven Landefeld, Director Rosemary D. Marcuss, Deputy Director www.bea.gov i Suggested Citation U.S. Department of Commerce. Bureau of Economic Analysis. Fixed Assets and Consumer Durable Goods in the United States, 1925–99. Washington, DC: U.S. Government Printing Office, September, 2003. ii Acknowledgments This publication was written by Shelby W. Herman, and Randal T. Matsunaga oversaw preparation of the Arnold J. Katz, Leonard J. Loebach, and Stephanie H. published volume. Barbara M. Fraumeni, BEA’s Chief McCulla with assistance from Michael D. Glenn. The Economist, recommended the depreciation profiles that estimates of fixed assets and consumer durables were were used. prepared by the National Income and Wealth Division Overall supervision was provided by Carol Moylan, and the Government Division of BEA. Specifically, the Chief of the National Income and Wealth Division; by estimates for the private sector and the chain-type esti- Karl Galbraith, former Chief of the Government Divi- mates for the private and government sectors were pre- sion; by Brooks B. Robinson, Chief of the Government pared by Michael D. Glenn, Phyllis Barnes, Kurt Kunze, Division; and by Brent R. Moulton, Associate Director Leonard J. Loebach, and Dennis R. Weikel, under the for National Economic Accounts. Kristina Maze edited direction of Shelby W. Herman. The estimates for the the volume and W. Ronnie Foster of Publication Ser- government sector were prepared by Charles S. Robinson vices in the Communications Division coordinated the and Jennifer A. Bennett, under the direction of D. Timo- production of this publication and designed the cover. thy Dobbs. Paul R. Lally, Chief of the Investment Branch, Duane Hackmann prepared the tables for typesetting. iii Contents Acknowledgments ................................................................................................................................................. iii Introduction .......................................................................................................................................................... M–1 Uses of the Estimates....................................................................................................................................... M–1 Relationship to the National Income and Product Accounts..................................................................... M–2 Other stock measures ..................................................................................................................................... M–3 Concepts and Methodologies .............................................................................................................................. M–5 Classification conventions ............................................................................................................................. M–5 Overview of the estimating methodology .................................................................................................... M–6 Perpetual inventory method ................................................................................................................... M–6 Investment................................................................................................................................................ M–6 Depreciation ............................................................................................................................................ M–6 Basic Formulas ............................................................................................................................................... M–7 Valuation ........................................................................................................................................................ M–8 Current-cost valuation ........................................................................................................................... M–8 Real-cost valuation .................................................................................................................................. M–9 Quality change ......................................................................................................................................... M–9 Historical-cost valuation ........................................................................................................................ M–10 Relationship among estimates ................................................................................................................ M–10 Adjustments for catastrophic losses and obsolescence ....................................................................................... M–10 Derivation of Investment Estimates ................................................................................................................... M–13 Investment in Private Fixed Assets ................................................................................................................ M–13 Sources...................................................................................................................................................... M–13 New nonresidential investment .............................................................................................................. M–16 Investment controls by industry..................................................................................................... M–17 Investment controls by type of asset............................................................................................... M–23 Adjustment of industry controls .................................................................................................... M–24 Distribution by type of asset and industry ............................................................................................ M–24 New residential investment ..................................................................................................................... M–25 Net purchases of used assets .................................................................................................................... M–25 Nonresidential assets ........................................................................................................................ M–25 Residential assets ............................................................................................................................... M–26 Investment by legal form of organization ............................................................................................. M–26 Nonresidential investment ............................................................................................................... M–26 Residential investment...................................................................................................................... M–27 Government Fixed Assets .............................................................................................................................. M–27 Consumer Durable Goods ............................................................................................................................ M–27 v Derivation of Depreciation Estimates ................................................................................................................ M–29 Service lives ..................................................................................................................................................... M–30 Private equipment ................................................................................................................................... M–32 Private nonresidential structures ........................................................................................................... M–33 Residential structures ..................................................................................................................................... M–33 Government-owned fixed assets ............................................................................................................. M–33 Durable goods owned by consumers ..................................................................................................... M–33 Retirement patterns ....................................................................................................................................... M–33 Derivation of Estimates of Privately-owned Automobiles ............................................................................... M–35 Glossary and Guide to the Tables........................................................................................................................ M–37 Glossary .......................................................................................................................................................... M–37 Guide to the Tables ......................................................................................................................................... M–38 List of Tables 1. Fixed Assets and Consumer Durable Goods 1.1. Current-Cost Net Stock of Fixed Assets and Consumer Durable Goods ........................................... 1 1.2. Chain-Type Quantity Indexes for Net Stock of Fixed Assets and Consumer Durable Goods