Nonresidential capital and employment are “complements” — when people are working they need a place to work and equipment to work with efficiently.
When our workforce was 138 million, we needed more investment in the non-residential capital stock, which had been starved thanks to the housing boom. But with employment down almost to 130 million, that situation is changed. How low non-residential investment gets depends on how low employment gets.
Thus, this morning’s news that non-residential construction is down yet again I take as a reliable indicator that employment is not coming back soon.