Capital spending weakens

January data for capital spending was decidedly weak, and the numbers for previous months were revised downwards. This does not support my general optimism, since capital spending lays the foundation for future growth. I would note, however, that capital spending has been lagging the growth in corporate profits for most of the past decade—corporations have built up huge stockpiles of cash as a result. When and if conditions improve, there is thus lots of room for new investment and a return to growth. Meanwhile, animal spirits are being depressed daily by the prospect of monstruous increases in government spending in coming years, and the need for similarly large increases in taxes, the burden of which seems destined to fall mostly on the rich and on corporate America.