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The Aging of Fixed Assets

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When people talk about America getting older, they are typically speaking about its population.  But as pointed out by Bloomberg, that’s hardly the only thing in the U.S. that’s aging.  According to the Bureau of Economic Analysis, the average age of all fixed assets, including things like factories and hospitals, stands at twenty three years, the oldest in records tracing back to nineteen twenty five.

The average age of these assets has been rising because both companies and governments have been reluctant or unable to spend money to replace older assets with newer ones.  That’s bad news for American living standards.  It suggest that Americans are working at less modern factories and using computers that are not nearly as powerful as they could be. 

Doctors are practicing medicine in hospitals that are in disrepair and not ready to handle the demands of newer equipment.  The average age of medical instruments is now approaching five years, the oldest on record since nineteen forty five.  It also helps explain why we end up with so many flat tires from potholes.  The average age of our highways and streets is more than twenty eight years, also the oldest on record.    

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.