Capital spending in the limelight
Consumer spending in the United States has, over the past year, pretty much prevented the economy from suffering a deep recession. It was, of course, the collapse in business capital expenditures that put a halt to the rapid growth that was experienced in the late nineties. Likewise, it is a good bet that the strength of spending on plant and equipment, hardware and software, will determine the vigour of the recovery. So, given its cyclical significance, it is a category that bears a closer examination. In his latest speech, and Lord knows he gives a lot of speeches, the chairman of the Fed noted the importance of capital spending in the current economic cycle. And, yes, he is right. It matters a lot for the economy and the markets, so we better have a look at it.
