Chicago Fed Letter
The biggest social safety net in the United States is the Social Security program, which provides retirement benefits totaling almost $900 billion to 54 million individuals. It is a concern for all but the wealthiest, then, that Social Security faces insolvency: The U.S. Social Security Administration predicts that in 2020, the costs of the program will exceed its income. This suggests it is critical for policymakers to evaluate whether there is a path for social security reform that will improve people’s welfare both before and after retirement while restoring the program’s solvency.
Business fixed investment represents the spending by businesses to increase production capacity. It is traditionally decomposed into equipment (such as computers and machines), structures (such as plants, shopping malls, or warehouses), and intellectual property (such as software and R&D). After declining sharply during the Great Recession, business fixed investment (BFI) recovered in 2010, but investment was again quite low in 2015 and 2016. This slowdown was driven in part by the decline of oil prices that led to a significant contraction in the oil drilling industry. Since then, growth has resumed. Figure 1 depicts this recent history.