Energy Investment Variability within the Macroeconomy

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Over the past 10 years, the U.S. energy sector has exerted substantial influence—both positive and negative—on overall U.S. business fixed investment. From 2010 to 2014, a time when energy production in the United States was expanding, investment in the energy sector was a boon to aggregate investment. However, following the sharp oil price decline in 2014, the energy sector was a drag on aggregate investment.

Assessing the energy sector’s contribution to aggregate investment requires an understanding of both the size of the sector as well as its individual segments. David Rodziewicz estimates how individual segments of the energy sector have contributed to U.S. aggregate investment activity over time. He finds that the share of energy investment in the United States increased during the last decade, and the concentration of investment shifted toward more volatile segments of the energy sector. Together, these changes contributed to higher aggregate investment variability.