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32. 1997 Economic Census





766. Net Stock of Fixed Reproducible Tangible Wealth

[In billions of dollars. As of December 31. For information on concepts and methodology, see summary below table or for more detail, see Fixed Reproducible Tangible Wealth in the United States, 1925-94, published in August 1999 or see http://www.bea.doc.gov/bea/an/wlth2594/maintext.htm

 
Item 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
 
CURRENT DOLLARS
    Net stock 10,297 11,325 11,932 12,350 13,034 13,731 14,636 15,494 16,465 17,404 18,225 18,649 19,411 20,418 21,637 22,630 23,707 24,826 26,179
 
Private 7,213 7,950 8,376 8,668 9,164 9,658 10,267 10,857 11,541 12,197 12,760 13,022 13,583 14,318 15,204 15,909 16,723 17,573 18,643
 
  Nonresidential equipment and software 1,420 1,576 1,666 1,724 1,814 1,921 2,035 2,131 2,265 2,400 2,542 2,623 2,708 2,829 2,992 3,183 3,352 3,518 3,736
    Information processing and related equipment 225 266 300 333 375 413 459 493 582 622 663 687 720 760 803 850 906 969 1,045
      Computers and peripheral equipment (NA) (NA) (NA) (NA) (NA) (NA) (NA) 111 90 92 91 83 82 82 86 94 102 111 121
      Communications equipment.. (NA) (NA) (NA) (NA) (NA) (NA) (NA) 258 261 277 294 306 315 325 335 344 364 388 416
      Instruments (NA) (NA) (NA) (NA) (NA) (NA) (NA) 73 91 100 112 122 133 144 154 165 175 184 193
      Photocopy and related equipment. (NA) (NA) (NA) (NA) (NA) (NA) (NA) 50 46 49 52 54 57 61 66 69 72 72 71
      Office and accounting equipment (NA) (NA) (NA) (NA) (NA) (NA) (NA) (NA) 23 22 20 18 18 19 20 20 21 22 24
    Industrial equipment 525 571 595 602 613 646 684 724 784 839 893 917 937 964 1,011 1,075 1,119 1,158 1,203
    Transportation equipment 306 336 345 357 375 395 412 416 444 455 472 497 522 557 604 651 690 721 781
    Other equipment 319 357 372 374 384 396 410 430 456 485 513 522 530 547 575 607 637 669 707
  Nonresidential structures 2,256 2,570 2,737 2,809 2,980 3,136 3,264 3,443 3,670 3,885 4,081 4,138 4,279 4,499 4,739 4,941 5,175 5,437 5,714
    Nonresidential buildings, excluding farm 1,169 1,312 1,437 1,532 1,656 1,787 1,927 2,067 2,216 2,373 2,514 2,576 2,676 2,817 2,992 3,125 3,286 3,489 3,722
    Utilities 695 752 797 817 842 853 861 902 940 985 1,005 1,021 1,051 1,109 1,148 1,190 1,229 1,262 1,271
  Residential 3,537 3,804 3,973 4,135 4,369 4,601 4,968 5,283 5,606 5,912 6,138 6,261 6,596 6,991 7,472 7,784 8,195 8,619 9,193
    Housing units 2,898 3,103 3,232 3,353 3,540 3,730 4,026 4,300 4,567 4,801 4,963 5,047 5,315 5,653 6,059 6,302 6,625 6,960 7,451
 
Government 2,151 2,371 2,509 2,567 2,669 2,782 2,949 3,103 3,262 3,439 3,612 3,732 3,895 4,086 4,322 4,533 4,725 4,928 5,118
 
  Equipment and software 300 322 346 367 412 425 437 447 479 516 559 590 619 645 672 686 692 692 696
  Structures 1,952 2,154 2,262 2,292 2,362 2,464 2,612 2,753 2,783 2,923 3,053 3,142 3,276 3,441 3,651 3,847 4,033 4,236 4,422
 
  Federal 653 709 753 791 827 856 896 930 986 1,040 1,087 1,130 1,176 1,229 1,279 1,314 1,343 1,364 1,380
    Defense 483 502 527 550 601 613 630 641 676 712 743 773 807 842 874 885 891 890 888
  State and local 1,498 1,662 1,756 1,776 1,842 1,927 2,053 2,173 2,276 2,399 2,525 2,603 2,719 2,857 3,043 3,219 3,382 3,565 3,737
 
Consumer durable goods 934 1,004 1,047 1,115 1,202 1,292 1,420 1,534 1,662 1,769 1,853 1,895 1,934 2,014 2,111 2,189 2,259 2,325 2,419
  Motor vehicles 257 271 279 304 343 392 449 485 515 550 574 567 574 599 629 647 663 669 699
  Furniture and household equipment 459 501 523 546 575 605 648 696 791 832 861 887 908 946 987 1,024 1,059 1,095 1,135
  Other 203 216 225 237 253 268 293 327 355 386 417 441 452 470 495 519 537 560 585
 
CHAINED (1996) DOLLARS
 
    Net stock 14,269 14,609 14,867 15,195 15,663 16,178 16,703 17,201 19,636 20,172 20,657 20,996 21,361 21,808 22,303 22,840 23,457 24,112 24,884
 
Private 9,950 10,227 10,429 10,664 10,996 11,346 11,684 12,003 13,893 14,243 14,562 14,790 15,033 15,345 15,694 16,075 16,521 17,005 17,570
 
  Nonresidential equipment and software 1,855 1,928 1,966 2,008 2,092 2,178 2,252 2,311 2,579 2,658 2,723 2,770 2,826 2,915 3,036 3,183 3,354 3,550 3,799
  Nonresidential structures 3,177 3,289 3,393 3,471 3,576 3,697 3,792 3,883 4,501 4,598 4,704 4,775 4,828 4,887 4,939 5,008 5,094 5,194 5,304
  Residential 4,921 5,012 5,072 5,187 5,329 5,471 5,641 5,808 6,822 6,994 7,142 7,251 7,384 7,547 7,720 7,884 8,074 8,263 8,478
 
Government 3,127 3,169 3,207 3,253 3,310 3,382 3,462 3,541 4,006 4,095 4,192 4,284 4,371 4,445 4,512 4,585 4,668 4,743 4,822
  Federal 969 970 974 985 1,000 1,022 1,047 1,076 1,245 1,268 1,291 1,308 1,322 1,327 1,326 1,326 1,334 1,329 1,327
  State and local 2,156 2,196 2,230 2,264 2,307 2,357 2,411 2,466 2,761 2,827 2,901 2,976 3,049 3,117 3,185 3,259 3,334 3,415 3,495
 
Consumer durable goods 1,198 1,220 1,237 1,286 1,363 1,455 1,561 1,656 1,748 1,841 1,906 1,927 1,962 2,021 2,099 2,180 2,268 2,365 2,498


| Source: U.S. Bureau of Economic Analysis, Fixed Assets and Consumer Durable Goods in the United States, 1925-97 (forthcoming in early 2001); and Survey of Current Business, April 2000.

http://www.bea.doc.gov/bea/dn2.htm

* Methodology for Net Stocks and Depreciation

The primary measure of the value of fixed reproducible tangible wealth is the net stock, that is, the value of the stock adjusted for depreciation. Depreciation is the decline in value due to wear and tear, obsolescence, accidental damage, and aging. For business and government, in addition to its use in calculating net stocks, the same depreciationconsumption of fixed capitalis presented as part of the NIPA's. Consumption of fixed capital is a charge for the using up of fixed capital, and as such, it is, along with compensation of employees and other components of gross domestic income and gross national income, one of the costs incurred and the profits earned in the production of gross domestic product (GDP) and gross national product (GNP). Consumption of fixed capital is deducted from GDP and GNP to derive net domestic product and net national product. In addition, government consumption of fixed capital is a component of government consumption expenditures (and GDP) as a measure of the value of the services of government fixed assets.

The net stock estimates in this article are presented in terms of two valuationscurrent cost and real cost. Current-cost (or "replacement-cost") valuation expresses all assets in the net stock in terms of the prices that prevailed in the period to which the stock estimates refer. For example, the yearend 1995 net stock estimate in current-cost valuation shows the assets that were in the stock at yearend 1995 expressed at the market prices prevailing for those assets at yearend 1995. The real-cost estimates are expressed either as quantity indexes or in "real" dollars, with 1996 as the base period.

Overview of methodology

Estimates of net stock and depreciationunder both the new and old methodologiesare derived using the perpetual inventory method, which is based on the accumulation of investment flows. With this method, both the net stock and depreciation of any given type of asset is a weighted average of past investment in that asset. Specifically, the net stock is calculated as the cumulative value of past gross investment less the cumulative value of past depreciation. The initial calculations are performed in real terms; current-dollar values are estimated by reflation.

Calculations of net stocks and depreciation are based on real investment data at the type-of-asset level of detail, which generally is the same level of detail as that presented in NIPA tables 5.7, 5.9, and 5.15, and real consumer purchases of durable goods, which generally is the same level of detail presented in NIPA table 2.7. At this detailed level, real investment in a given type of asset is obtained by dividing current-dollar investment in that type by the price index for new assets of that type, expressed as 1996=100, multiplied by 100. (Real investment for higher levels of detail shown in the NIPA tables is calculated using BEA's chain-type annual-weighted indexes.)

Under the new methodology, most assets are assumed to have depreciation patterns that decline geometrically over time. For a given year, the depreciation charges on existing assets are obtained by multiplying the prior year's charge by one minus the annual depreciation rate. For each type of asset, depreciation is cumulated over all vintages, and net stocks are estimated by subtracting cumulative depreciation from cumulative gross investment.

As is the case for real investment, year-to-year growth rates for both depreciation and net stocks on a real-cost basis for higher level aggregates are then computed using the annual-weighted Fisher index. These rates are chained together to obtain cumulative growth rates, which in turn are used to obtain estimates of levels expressed as indexes (1996=100) and as chained (1996) dollars.

Current-cost estimates (in dollars) are obtained by "reflating" real estimates at the type-of-asset level. Depreciation is reflated to current cost using indexes that reflect average prices of new assets for the year; net stock is reflated to current cost using indexes of prices of new assets for the current yearend. Current-cost aggregates are obtained by directly summing current-cost estimates for the various types of assets. Finally, estimates by type of asset are adjusted for the net value of assets destroyed in wars and natural disasters.

Investment flows

The investment flows in new equipment and structures by type and the transfers of used assets used to implement the perpetual inventory method come from the revised NIPA's. For privately owned assets, investment by type of asset is distributed by industry and by legal form of organization, primarily through the use of data from BEA's benchmark input-output accounts for 1982 and 1987 and from the 1987 and 1992 Economic Censuses. These flows are modified to account for transfers of used assets between sectors of the economy. (Because of the lack of information, transfers of used assets within sectors are not accounted for in the wealth estimates.)

Depreciation patterns and depreciation profiles

In the perpetual inventory method, the pattern of depreciation charges for a given asset is determined by its "depreciation profile." The new methodology for estimating depreciation uses depreciation profiles that reflect a geometric pattern and that replace the previously used profiles, which were based on straight-line depreciation and on assumed patterns of retirements. The depreciation profile for a given type of asset describes the pattern of how, in the absence of inflation, the price of an asset of that type declines as it ages. Although the profile for a given type of asset is assumed to be constant over time, different vintages of a given type of asset may have profiles that differ from those of other vintages of the same type of asset.

The new net stock and depreciation methodology uses depreciation profiles that are based on empirical evidence on used asset prices. Ideally, the profiles for each type of asset should be estimated using prices for used assets in resale markets, but such studies have only been conducted for some types of assets. However, the available studies suggest that, in general, depreciation profiles are more closely approximated by a geometric pattern of price declines than by a straight-line pattern. Consequently, in the revised estimates, the depreciation profiles for most assets were assumed to be strictly geometric, and the appropriate rate of declining-balance depreciation was taken from empirical studies of similar classes of assets. The depreciation rates for specific types of assets were then determined by dividing the appropriate declining-balance rate for each asset by the asset's assumed service life. For autos and for computers and computer peripheral equipment, two classes of assets for which information on used asset prices makes it possible to estimate the underlying depreciation profiles, the actual empirical profiles were used. For computers and peripheral equipment, the profiles were taken from studies by Stephen Oliner. For missiles and nuclear fuel rods, depreciation was estimated using a straight-line pattern and a Winfrey retirement pattern, which is essentially a bell-shaped curve.

The new geometric depreciation rates and the associated declining-balance depreciation rates and service lives used by BEA to derive the new estimates of net stocks and depreciation are shown in table A. Except as previously noted, BEA's depreciation rate equals the declining-balance rate divided by the service life. The rate of declining-balance depreciation is the multiple of the comparable straight-line rate used to calculate the geometric rate of depreciation. For example, a 1.65 declining-balance depreciation rate refers to a geometric rate of depreciation of 1.65/L, where L is the service life of the asset in years and 1/L is the straight-line rate. Separate service lives are used for each type of asset and for the estimates of fixed private capital; separate service lives are also used in different industries for certain types of assets. Most of the service lives are held constant over time because the information necessary to estimate changes in them is not available. The lives themselves are based on a wide variety of sources and for most types of assets, are the same as those used for the previously published estimates.

* Wealth estimates

Fixed reproducible tangible wealth consists of fixed private capital, fixed government capital, and durable goods owned by consumers.

Fixed private capital consists of equipment and structures, including owner-occupied housing, that are owned by private business or nonprofit institutions and that are located in the United States.

Fixed government capital consists of equipment and structures that are owned by the Federal Government and by State and local government agencies, including government enterprises, and that are located in the United States (except for national defense equipment, for which coverage is worldwide).

Durable goods owned by consumers are the goods that are purchased by households for their nonbusiness use and that have a life expectancy of at least 3 years.

Capital stock consists of fixed private capital and fixed government capital.

All of the wealth estimates are classified by type of asset. In addition, estimates of fixed private capital are further classified by legal form of organization.

Corporate business consists of all entities required to file Federal corporate income tax returns (IRS Form 1120 series), including mutual financial institutions and cooperatives subject to Federal income tax, private noninsured pension funds, nonprofit organizations that primarily serve business, Federal Reserve banks, and Federally sponsored credit agencies.

Sole proprietorships consists of all entities that are required to file IRS Schedule C (Profits or Loss From Business) or Schedule F (Farm Income and Expenses) if the proprietor meets the filing requirements and of owner-occupied farm housing.

Partnerships consists of all entities required to file Federal partnership income tax returns, IRS Form 1065 (U.S. Partnership Return of Income).

Other private business consists of all entities that are required to report rental and royalty income on the individual income tax return in IRS Schedule E (Supplemental Income and Loss) if the individual meets the filing requirements, tax-exempt cooperatives, owner-occupied nonfarm housing, and buildings and equipment owned and used by nonprofit institutions that primarily serve individuals.

Estimates for fixed private capital are also presented by industry on the basis of the 1987 Standard Industrial Classification (SIC). Industry data are presented on an "establishment" basis; an establishment, as defined for the purposes of the SIC, is an economic unit, generally at a single location, where business is conducted or where services or industrial operations are performed.

In addition, the corporate business stock estimates are presented in two groups of SIC industries. Financial industries consists of the following SIC industries: Depository institutions, nondepository institutions, security and commodity brokers, insurance carriers, regulated investment companies, small business investment companies, and real estate investment trusts. Nonfinancial industries consists of all other private industries.

Estimates of residential capital are also classified by "tenure group"that is, tenant-occupied residential capital and owner-occupied residential capital. Tenant-occupied residential capital consists of rental housing, including all government-owned residential capital. Owner-occupied residential capital consists of housing occupied by private owners.

In the distributions of capital by type of owner, legal form of organization, and industry presented here, capital assets are classified on an ownership basis; that is, capital assets held under operating leases are recorded in the stock of the lessor, while capital assets held under capital leases are recorded in the stock of the lessee. The ownership basis is used in order to be consistent with the NIPA's and because the data necessary to compute capital stock estimates on a use basis are not available annually.

Estimates of fixed capital for the Federal Government are further classified by national defense and nondefense. National defense fixed capital consists of equipment and structures owned by the U.S. Department of Defense; it excludes family housing for the armed forces, civil works construction by the Army Corps of Engineers, industrial facilities, military hospitals, and the Soldiers' and Airmen's Home. Nondefense fixed capital consists of all other fixed capital owned by the Federal Government.

Gross investment, depreciation, net stock, and average age of net stock

Gross investment is the value of purchases of new fixed capital assets. For a given type of owner, it also includes net purchases of used assets from other types of owners (private business, governments, households, and nonresidents). Data are not available to adjust for transfers of used assets among industries or among legal forms of organization.

Depreciation is the decline in value due to wear and tear, obsolescence, accidental damage, and aging. For the estimates presented here, most assets are assumed to have depreciation patterns that decline geometrically over time so that, for a given year, the depreciation charges on existing assets are obtained by multiplying the prior year's charge by one minus the annual depreciation rate.

Net stock is the value of fixed reproducible tangible wealth after adjustment for depreciation. With the perpetual inventory method that is used to derive the estimates presented here, the net stock in the historical-cost valuation and (at the deflation level) in the real-cost valuation is calculated as the cumulative value of past gross investment less the cumulative value of past depreciation. Net stock in current-cost valuation is the value of the items in the real-cost net stock measured in the prices of the current yearend.

Average age of net stock at a given yearend is a weighted average of the ages of all investment in the stock at that yearend. The weight for each age is based on its value in the net stock.

Valuation of the estimates

The estimates of private net stocks and depreciation presented here are computed in historical-cost, real-cost, and current-cost valuations, using investment data in historical-cost and real-cost valuations. The average ages of net stocks are presented only for the current-cost and historical-cost valuations. Estimates for government capital are presented on a similar basis except that estimates of net stocks and depreciation are not presented in a historical-cost valuation.

Historical-cost valuation measures the value of fixed assets in the prices of the periods in which the assets were purchased new.

Real-cost valuation measures the value of these assets after the effects of price change have been removed. For this valuation, estimates for aggregate series are presented as chain-type quantity indexes, with 1992 equal to 100. These indexes are computed using annual-weighted Fisher-type indexes to obtain year-to-year growth rates, which are chained together to obtain cumulative growth rates. Estimates for selected higher level aggregates are also presented in chained (1992) dollars.

Current-cost valuation measures the value of these assets in the prices of the given period, which are yearends for net stocks and annual averages for depreciation.

*



https://allcountries.org/uscensus/766_net_stock_of_fixed_reproducible_tangible.html

These tables are based on figures supplied by the United States Census Bureau, U.S. Department of Commerce and are subject to revision by the Census Bureau.

Copyright © 2006 Photius Coutsoukis and Information Technology Associates, all rights reserved.