How Much of GDP Just Replaces Worn-Out Capital
Part of what the U.S. economy produces each year adds nothing new: it only replaces buildings, machines, software and other assets that wore out or became obsolete. The main line shows that depreciation as a share of GDP, from 11.7% in 1947 to 16.4% in 2025. The other three lines split it into private intellectual property (software, R&D and creative originals), private equipment, and everything else. Intellectual property drove most of the long rise; the total has stayed near 16% since 2008.
What does it show?
About 16% of U.S. GDP only replaces worn-out capital, a share near 16% since 2008 with no AI-era jump yet; in 2024 private intellectual-property depreciation passed equipment for the first time in BEA records back to 1925.
Methodology
Current-cost depreciation of private and government fixed assets (BEA Fixed Assets Accounts, Table 1.3, line 2; consumer durable goods excluded) divided by nominal GDP (BEA, via FRED series GDPA), both in current dollars, annually. This depreciation total is the national accounts' consumption of fixed capital: in 2024 and 2025, the years checked, it matches NIPA Table 1.7.5 line 5 to within 0.01%. Private intellectual property (software, research and development, and entertainment, literary and artistic originals) and private equipment are Table 1.3 lines 7 and 5; everything else is private structures, private residential and all government fixed assets, so the three parts sum to the total. Depreciation is BEA's estimate of the decline in value from wear and tear, obsolescence, accidental damage and aging, modeled from assumed service lives rather than measured as an outlay; GDP minus it is net domestic product. Depreciation follows investment with a lag, so a recent investment surge raises the share only gradually, and private equipment covers all business machinery, not only computers, so AI-related capital cannot be isolated here. The chart starts in 1947: before then, Depression and wartime swings in GDP, not capital, drive the ratio. Nominal ratios: price changes in capital goods relative to all output move the shares.