Capital goods are materials, tools, and equipment that companies use to make products or provide services. These goods help in producing other items but are not sold directly to consumers. Examples include buildings, machines, vehicles, tools, and equipment used in factories.

These goods play a big role in the production process, but they do not become the final product that consumers buy.

Understanding Capital Goods

Capital goods are also called tangible assets because they are physical objects. Businesses use capital goods to create items that other companies use to make finished products.

Industries like automobile manufacturing, airplane production, and machinery companies rely heavily on capital goods. These industries use machines, tools, and equipment to produce their products or services.

Capital goods do not directly provide satisfaction to consumers. Instead, they help create things that consumers later enjoy.

Types of Capital Goods

Capital goods come in many forms:

1. Manufacturing Equipment

  • Machines used in factories

  • Tools used on assembly lines

  • Equipment that helps make cars, trucks, and other products

2. Industrial Electronics

This includes:

  • Wire harness assemblies

  • Air-purifying respirators

  • High-resolution digital imaging systems

3. Service Industry Capital Goods

People who provide services also use such as:

  • Hair clippers for hairstylists

  • Paintbrushes for painters

  • Musical instruments for musicians

Some capital goods are called “core capital goods”. These do not include items made for the Defense Department, like weapons or military uniforms. Data about core  is shared in the U.S. Census Bureau’s monthly Durable Goods Report.

Capital Goods vs. Consumer Goods

  • Consumer goods are finished products that people buy for personal use.
    Examples: milk, clothes, appliances.

  • Capital goods are used to make other goods and are not sold directly to consumers.

However, some items can be both capital goods and consumer goods.
For example:

  • An airplane used by an airline is a capital good, but a private jet bought by a person is a consumer good.

  • A computer in a business is a capital good, but a computer at home is a consumer good.

Examples of Capital Goods

Here are some examples of capital goods used in different industries:

  • Machines used in factories

  • Technology and manufacturing tools

  • Infrastructure like railways and broadband cables

  • Coffee machines used in a coffee shop

  • Delivery vehicles used by a courier company

  • Ovens used in restaurants

  • Landscaping equipment used by professionals

Many items can be both consumer and capital goods depending on who uses them and for what purpose.