Former Fed Chairman Alan Greenspan has frequently pointed out that while the aggregate output of the United States is five times greater in real terms than it was in 1950, the output weighs the same. Greenspan’s observation deserves special attention in light of the lower than expected rise in durable goods orders (2.5 percent versus an expected 3.5 percent) last month, which followed a 9.3 percent plunge in January.

RGE Monitor’s Nouriel Roubini told readers that the lower number confirms “the U.S. will soon experience a hard landing,” while the Wall Street Journal’s Justin Lahart attributed the low number to cost cutting on the part of businesses such that Fed Chairman Bernanke “may need to throw his inflation caution to the wind and cut rates.” What’s perhaps been forgotten amidst all this worry is that the “big items” that fall under the heading of durable goods are increasingly irrelevant to the overall health of the U.S. economy.

To understand why, one need only look at the composition of the S&P 500 upon its inception in 1957 compared to today. Fifty years ago, steel, aluminum, chemical, paper, and mining companies made up half the value of the S&P, whereas today those sectors account for only 12 percent of the index’s value.

Conversely, the technology, health-care, and financial sectors now account for nearly one-half of the S&P, compared to 6 percent fifty years ago. So while many still concentrate on statistics measuring investment in new plant and equipment, the actual U.S. economy has evolved in such a way that these measures are far less impactful to our overall economic well-being.

While governments compete for natural resources in the vain hope of shielding their economies from world price fluctuations in those resources, U.S. businesses today compete for human resources to gain advantage in what the late economics writer Warren Brookes termed “the economy of the mind.” As evidenced by the market capitalizations of former economic-behemoths General Motors and U.S. Steel versus modern giants such as FedEx, Goldman Sachs, and Google, purchases of human capital are what matter in today’s economy.

As evidenced by the market capitalizations of former economic-behemoths like General Motors versus modern giants like FedEx, purchases of human capital are what matter in today’s economy.

GM and U.S. Steel carry market caps of $19 billion and $10 billion respectively, and as the growth of each is heavily reliant on big-ticket equipment purchases, poor durable goods reports might be indicative of problems in the manufacturing sector. “Might” is the operative word here—the low numbers of the last two months were preceded by two strong monthly increases. Whether the manufacturing sector is contracting at the moment or not, its market and economic impact is greatly reduced compared to fifty years ago.

Though FedEx, with a market cap of $34 billion, runs a business that is very much reliant on heavy equipment, its success is rooted in the logistical genius that enables it to transport packages of all shapes, sizes, and weight to various points around the world in a timely manner. The airplanes that it purchases are in the end peripheral compared to the human operational brilliance that makes its planes run full, and on time.

Microsoft’s Bill Gates once said his firm’s greatest competition did not come from companies in the software sector, but from Goldman Sachs (market cap: $86 billion). It competes with the latter for the best minds. Goldman isn’t the world’s leading investment bank due to equipment expenditures, but because it consistently hires the top financial minds who offer the firm’s clients the very best in terms of investment banking and money management services, research, and trade execution.

Google conducts extraordinarily grueling interviews in hopes of finding the people capable of expanding its Internet footprint. Capital equipment is secondary, with Google’s primary value emanating from its human capacity to create search innovations that aid individuals and businesses alike. Importantly, for FedEx, Goldman Sachs, and Google, the value of each is a function of the people who report to work each day.

Given the shrinking weight of capital-intensive industries in the value of the S&P 500, it would be hard to argue that two months of negative reports could harm the economy in the way that many assume. That stocks remain near all-time highs seems to bolster the notion that government measures of equipment purchases are no longer relevant to an economy whose value emanates not from big equipment, but from big minds.

John Tamny is editor of RealClearMarkets. He can be reached at jtamny@realclearmarkets.com

Image credit: "Life in the Googleplex" by Jeff Ryan