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Eric Basmajian: Only 23 cents of every investment dollar now builds new assets

Eric Basmajian: Only 23 cents of every investment dollar now builds new assets
Only 23 cents of investment builds new assets

Eric Basmajian highlights a shift in investment dynamics, noting that in the 1950s, 48 cents of every investment dollar was used to build something new, whereas today that figure has dropped to 23 cents. The rest of investment spending is directed toward replacing worn-out assets.

Basmajian adds that the rise of AI and increased software investment may further accelerate this trend, given that software depreciates far more quickly compared to physical assets like houses. According to Basmajian, record levels of capital expenditure today could mean higher replacement costs in the future.

Basmajian recently observed that computer equipment investment has climbed to 1.3% of GDP, surpassing levels seen during the dot-com boom, according to past data. He also remarked that the economy outperformed current conditions 80% of the time in historical periods, as noted in a separate report. These findings provide additional context for Basmajian’s current analysis of capital allocation trends.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.

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