Investment in US factories has soared since the end of 2022


Real business investment in manufacturing structures in the United States has risen sharply since the end of 2022. The amount of investment in this category in the first quarter of 2024 was about 80 percent higher than the amount at the end of 2022. “Industrial policy” legislation enacted in recent years likely helped fuel this sharp increase. For example, the Inflation Reduction Act and the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act, both enacted in 2022, provided large subsidies for the renewable energy and semiconductor industries.

Although investment in manufacturing structures represents a relatively small part of overall US economic activity, the recent increases in this category have boosted annualized GDP growth by about ¼ percentage point since the end of 2022. Notwithstanding high interest rates, other types of US business investment have also increased. Altogether, private business fixed investment has contributed about ½ percentage point to annualized real GDP growth since the end of 2022.

This PIIE Chart is adapted from Karen Dynan’s blog post PIIE projects continued global economic growth in 2024 amid lingering inflation concernsand her presentation at the Global Economic Prospects: Spring 2024 event.

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