Thursday, September 3, 2009
The Return of Capital Spending
This article gives a very positive outlook for the future recovery. First, it states that many companies feel more confident about investing more money into heavy equipment, new software and buildings. The author also mentions that those companies that continue cut spending are “doing less drastically.” Finally, the article emphasizes that “capital spending will be a critical growth driver in the coming years.” I think that it is a very important factor in the economy, and it might push the unemployment rate down at the beginning of 2010.
Subscribe to:
Post Comments (Atom)
4 comments:
Capital spending is definitely going to play a major role in getting the world economy back on track. However, I feel that consumer spending should be boosted up first since that would drive up the demand for all the goods and services needed in the market. Obviously, given the current credit markets, it would be a hard thing to achieve since banks are being extra careful to whom they should lend money out!
I feel that while consumer spending might be a sign of more improvement in the economy. I feel that capital spending is still a good sign because as the companies start to spend money on capital, the consumer will hopefully follow suit and start spending more. This increased capital spending should also be good for the unemployment, and hopefully companies start hiring again.
I agree, that as a major economic indicator, increased capital spending will play a large role in the future recovery of the economy. Spending is the support that the economy needs to prosper. Unfortunately other factors stand in the way, such as the heightened difficulty of getting a loan in the credit crisis. Also, unemployment is now almost 10%. With these two factors together, I don't see where the money is coming from. Hopefully, as the article suggests, "big spender" companies will continue to assist in the process.
In the end of the article, the author mentions that many global companies are investing into their overseas operations. For example, Campbell Soup is investing into Russian and and Chinese markets, and Exxon is financing its facility in Qatar. Since these actions are not going to be accounted for in the US GDP, how do you think this type of capital spending is going to help the recovery of the US economy?
Post a Comment