Capital Consumption Allowance - CCA

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DEFINITION of 'Capital Consumption Allowance - CCA'

The amount of money a country has to spend each year to maintain its present level of economic production. The capital consumption allowance (CCA) is calculated as a percentage of gross domestic product (GDP). The percentage of GDP that is not allocated to the CCA is called net domestic product and represents investment spending. CCA is also sometimes referred to as depreciation.



INVESTOPEDIA EXPLAINS 'Capital Consumption Allowance - CCA'

A CCA that is too high a percentage of GDP indicates poor economic growth. This situation occurred in the United States during the Great Recession of 2008. Before the recession, investment spending was $889 billion. By 2009, it had declined 94% to $54 billion from its peak in 2006. Meanwhile, the CCA in 2009 was $1.46 trillion, or about 92% of GDP.

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