CapEx Intensity

Macro
Solid macro setup for CapEx fueled productivity
Author

Mike Aguilar

Published

November 4, 2025

The US is generating enough cash to fund extensive capital investments. Potentially bullish signal for productivity gains if CapEx focused on innovations ala AI.

Capital Deepening

CapEx/Rev

Record High CapEx / Rev

  • CapEx: Private Nonresidential fixed investment (Structures, Equipment, IP). Nominal. SAAR.
  • Rev: Gross Output. Nominal. SAAR.
  • Caution: Gross Output is for ALL industries (public and prviate), while the CapEx proxy is private only. I’ll attempt to adjust in future posts.

Implication: Economy is allocating a large share of gross receipts toward long term investment

Likely culprit: AI, though it was high pre - COVID

Generating Cash

CapEx/OpCashFlow Low CapEx / Earnings Before Tax

  • CapEx: same as above
  • EBT: Net Operating Surplus minus Net Interest, Domestic Industries. Nominal. SAAR.
  • Caution: This EBT isn’t an exact analogue to operating cash flow, but close.

Implication: Economy generating sufficient cash to fund investments.

Likely culprits: 1) Higher profit margins, 2) Lower interest rates