U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.
Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.
Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.
At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms' expansion plans.
Should the White House and Congress strike a deal to avoid the fiscal cliff, the economy could get a boost. "You might very well get a burst of pent-up demand coming at the start of next year," said Paul Ashworth, chief U.S. economist at Capital Economics, a consultancy.
"Given the timing of the drop-off in business investment," he said, "you have to think it's not just a coincidence with the timing of the fiscal cliff."
Unless the business investment slowdown reverses quickly, it could weigh further on growth prospects and the stock market
http://online.wsj.com/article/SB10001424127887324595904578123593211825394.html
Pent-up demand? We wish. My spouse's revenue is on pace to be half of last year, and certainly the last 6 weeks aren't going to change that.
ReplyDeleteJean
"Should the White House and Congress strike a deal to avoid the fiscal cliff, the economy could get a boost"
ReplyDeleteBased on what Republicans were saying during the election cycle, a "deal" would seem to mean we cut spending. If we cut spending, that is more money from the economy.