Different interpretations

The use of the terms "capital formation" together with "investment" can be somewhat confusing, partly because the concept of capital itself can be understood in different ways.

Capital formation measures were originally designed to provide a notion of investment and growth of the "real economy" in which goods and services are submitted using tangible capital assets. The measures were subjected to identify reorientate in the growth of physical wealth across time. However, the international growth of the financial sector has created numerous structural changes in the way that office investments occur, and in the way capital finance is really organized. This non only affects the definition of the measures, but also how economists interpret capital formation. The almost recent alterations in national accounts indications mean that capital measures and numerous other measures are no longer fully comparable with the data of the past, except where the old data series shit been revised to align them with the new picture and definitions. US government statisticians gain admitted frankly that "Unfortunately, the finance sector is one of the more poorly measured sectors in national accounts". The main reason is that national accounts were at first primarily intentional to capture changes in tangible physical wealth, not financial wealth in the realise of financial claims.