Once again, new orders for Capital Goods—i.e., business investment—exceeded expectations. December orders were up 1.4% (vs. an expected 1.3%), on top of upward revisions to the data for the previous two months. Over the course of last year, business investment has increased by 15.5%, a staggering figure. If any part of this recovery can be termed "V-shaped," this is it.
(I'm using a 3-mo. moving average in this chart because the raw data are plagued by a seasonal adjustment flaw that doesn't fully correct for what appears to be a tendency for orders to surge at the end of each calendar quarter.)
Strong gains in business investment reflect the return of confidence to the business sector, while at the same time laying the groundwork for future gains in productivity.
Capital is cheap, businesses can easily expand, improve worker productivity. In the private sector, output gets better and cheaper all the time, the genius of the free enterprise system.
ReplyDeleteUnemployment claims up today. Huge amounts of slack in the system.
Commercial rents of all kinds vey soft.
The Fed has the field wipe open to stimulate. I wonder if the Fed can get up back to the 2 percent inflation target.
Benjamin,
ReplyDeleteWhat investments/stocks would you buy these days?
On a second note, industrial property is going gangbusters.
Someday, maybe the other sectors of RE will end up following.
Sorry, the numbers looked great, but if you scratch the surface you will find that all the additional spending is driven by defense (e.g. the government).
ReplyDeleteSo not really business, just the gov't buying gun's and bombs.... not really what most people associate with corporate growth
The series I show in the chart excludes defense-related spending.
ReplyDeleteApologies for my error. The figure I saw this morning showed flat once Aerospace and defense were removed (the first because its too volatile), the second because it says nothing about economic growth...
ReplyDeleteLori-
ReplyDeleteI am flattered anyone wants my opinion.
What part of the country are you? Industrial is getting better here in Los Angeles, but slowly.
I feel we are on the cusp of a long secular bull market, even globally. Only wars and other huge financial regulatory failures can stop this bull market.
I don't know how long you want to stay invested either (your age). I don't know if you want to invest overseas or not.
I like dividend stocks and property. There are some dividend ETFs.
Best of luck in all regards.
But remember--all gold is fool's gold. Invest in your family, and productive businesses first. And, if you can, when everyone is gloomy and afraid, charge in.
Best of luck