Dean keeps saying

It is also important to note that the financial crisis has little direct relevance to the current weakness of the economy. The problem is simply that there is nothing to replace the demand generated by the housing bubble. Consumption is actually unusually high relative to income and investment in equipment and software is back to its pre-recession share of GDP.

I just don’t know in what sense this is a meaningful reading of the facts. CPE is high relative to GDP but this is largely a way of saying that Medicare and Medicaid keep paying on behalf of beneficiaries even during a recession.

As I have mentioned many times, if we look at real retail sales they are no where near recovered.

FRED Graph

and of course the gap is largely cars and trucks.

Equipment and Software is growing well, though importantly not in nominal terms in real terms. So, I can’t easily get good charts out of BEA and FRED doesn’t have exactly what I want but consider this

Here is the growth Equipment and Software on the balance sheets of Non Nonfinancial Corporate Business.

FRED Graph

Now here is Investment in Equipment and Software from the NIPA tables.

FRED Graph

There are a couple of things going on here. One, there is depreciation, which is not counted in the gross investment figures. Two there are financial corporations which are big investors in Equipment and Software, by which we mean, Custom Software.

Three, however, is that in all cases the growth is driven by software. Not even tech generally, but software. Well, software has huge price declines associated with it. So, even if you are spending the same amount of money on software the estimated real investment in software will be going through the roof. That is basically what’s happening.

In terms of raw dollars, investment in Equipment and Software means by and large, transportation equipment.  Cars, trucks, trains, boats, airplanes etc.

This is in the dumps. At one point the truck numbers were unbelievable. I think I saw a 90% collapse in investment in trucks. So, even though transportiona has climbed part way back up, its still pretty low and I don’t think is yet outpacing obsolescence. That is, the commercial vehicle fleet is still shrinking.