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Abstract:
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Americans invested $72 billion in cultivated assets in 2019. By category, investment was: $7 billion in long-lived food animals, $2 billion in horses, $10 billion in farm plants, and $53 billion in landscaping plants. The internationally agreed guidelines for national accounts explicitly recommend that cultivated assets should be tracked in measures of capital (United Nations Statistics Division 2008, sec. 10.88–10.96). However, this recommendation is not currently implemented in either the U.S. National Economic Accounts (Bureau of Economic Analysis 2019) or the U.S. agricultural productivity accounts (Shumway et al. 2015).
This paper explores how capitalizing cultivated assets changes the U.S. National Economic Accounts from 1929 to 2019 and the industry-level production account from 1948 to 2019. First, real gross domestic product (GDP) growth before 1990 decreases slightly when cultivated farm assets are capitalized. Second, the 2000s housing bubble and bust appears more dramatic when cultivated landscaping is capitalized. Third, measured real estate sector productivity growth falls noticeably when cultivated landscaping is tracked as a capital input.
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