Computer Investment Was a Fifth of Growth, Before Imports

WASHINGTON, Oct. 29 — InvestmentInvestment in computers and peripheral equipment added 0.72 percentage point to the 3.4 percent annual rate at which real gross domestic product grew in the third quarter, about a fifth of it, the Bureau of Economic Analysis’s advance estimate showed on Thursday. With other information-processing equipment and software, broad categories that take in the data-center build-out but do not measure it, the figure was 1.09 points, about a third.ContributionsBEA splits growth among GDP’s parts in percentage points. In the third quarter consumer spending contributed 2.52, investment 3.27 and government 0.90, and net exports took away 3.32; by this paper’s arithmetic they sum to 3.37.

Those are gross contributions, counted before imports are subtracted. GDP takes in what buyers spend, foreign-made equipment included, and takes imports out separately. Imports of computers, peripherals and parts, for every kind of buyer, rose to a $751.3 billion annual rate, from $601.4 billion in the second quarter.

The difference matters for reading the build-out in the national accounts, which measure what is produced in the United States. Investment counts equipment “regardless of whether the equipment and software are domestically produced or imported,” BEA’s handbook says, and the bureau said its estimate of the third quarter’s rise in equipment, led by information-processing equipment, was “based primarily on data for imports.”Annual RatesBEA’s quarterly figures are seasonally adjusted and expressed at annual rates. The 3.4 percent is 0.8 percent at a quarterly rate, the release says. The published tables net only part of that.

BEA publishes a netted series, “final sales of computers,” and it contributed −0.61 percentage point in the quarter. It adds what consumers, businesses and governments spend on computers to exports of computers, peripherals and parts, and subtracts imports of them. “Gross domestic product excluding final sales of computers” grew at a 4.0 percent rate.The NettingBEA sets out the series’ parts in its Table 9.2U. Final sales of computers fell to a $42.8 billion annual rate, from $105.8 billion in the second quarter and $176.2 billion a year earlier.

The split is an accounting decomposition, not an estimate of what growth would have been without the computers. The series leaves out inventories: computers or parts imported and held in stock are subtracted in its imports but counted as inventory investment, in the rest of GDP, and the tables do not show how much. Inventories as a whole added 1.61 points to growth. The series also swings: it added 0.31 point in the second quarter and took 0.54 off in the fourth quarter of 2025.

The Machines

In current dollars, business investment in computers and peripheral equipment ran at a $504.1 billion annual rate in the third quarter, up from $420.1 billion in the second and more than three times the $164.0 billion of the first quarter of 2024. In real terms it grew at a 66.7 percent annual rate, after shrinking at a 6.7 percent rate in the second quarter.

Part of the rise is price. BEA’s price index for that investment rose at a 24.4 percent annual rate in the third quarter and at 30.9 percent in the second, and it is up about 20 percent since the first quarter of 2024, by this paper’s arithmetic. In chained dollars, the bureau’s measure of quantity, the investment has grown about 2.6 times over the same span. The release does not say why the prices rose.

The Imports

GDP adds what is spent and subtracts what is bought from abroad. Real imports rose at a 19.7 percent annual rate and took 2.64 points off growth. Of that 19.7 percent rise in imports, computers, peripherals and parts accounted for 8.38 points, about 43 percent by this paper’s arithmetic, and capital goods other than automotive for 16.91 points; those are contributions to the growth of imports, not of GDP. “The largest contributor to imports was capital goods, except automotive,” the bureau said. Its release puts the rule plainly: “An increase in imports results in a negative contribution to GDP, and a decrease in imports results in a positive contribution to GDP.”

An increase in imports results in a negative contribution to GDP, and a decrease in imports results in a positive contribution to GDP.

The import figures mix machines bought by businesses with those bought by consumers and governments, and with parts, so they do not show what share of any buyer’s computers was made abroad. The advance estimate drew September’s trade partly from the Census Bureau’s advance report, and it will be revised.

At Home

Equipment investment is valued at what buyers pay, which includes “trade margins and transportation costs,” BEA’s handbook says: the cost of marketing goods through wholesalers and retailers and of carrying them by rail, truck, water and air. The tables do not say how much of that is earned in the United States.

Construction is one domestic activity the tables show: private investment in data centers ran at an $83.0 billion annual rate in the third quarter, up from $66.1 billion in the second and $28.4 billion in the first quarter of 2024. Private nonresidential structures investment, of which data centers are one part, added 0.15 percentage point to growth, its first positive contribution since the first quarter of 2025.Data CentersBEA publishes data centers as a line of private investment in nonresidential structures, in its Table 5.4.5, in current dollars. Its handbook counts structures “in the United States regardless of whether the structure is U.S.-owned or foreign-owned.”

The companies’ own figures are larger and drawn differently. Microsoft, Alphabet, Amazon and Meta spent $208.7 billion on capital in the quarter, by this paper’s sum of each company’s own measure. Those figures are worldwide, and Microsoft’s and Meta’s include finance leases, so they are not comparable with BEA’s American totals. Amazon said the $94.8 billion rise over a year in its twelve-month purchases of property and equipment, net of sales and incentives, “primarily reflects investments in artificial intelligence.” BEA’s tables have no line for AI.

For the Federal Reserve, which meets Dec. 8–9, the quarter pairs fast growth with prices up 3.6 percent in September from a year earlier, by the PCE price index. Excluding food and energy, the index rose 3.1 percent. The Fed held its target range at 3.75 to 4 percent on Oct. 28 on a 10–2 vote, with Lisa D. Cook and Beth M. Hammack preferring a quarter-point rise. Its statement said that “capital investment is robust” and that “Inflation remains elevated.”

The next reading is BEA’s second estimate of the quarter, due Nov. 25 at 8:30 a.m. Eastern, alongside October’s figures on income, spending and prices. It will also carry the bureau’s first figures on corporate profits for the quarter.