Firms Shy Away from Spending– Eric Morath in the WSJ
Companies appear reluctant to step up spending on the basic building blocks of the economy, such as machines, computers and new buildings. The broadest measure of U.S. business investment advanced 2.2% from a year earlier in the third quarter, the Commerce Department said last week, marking one of the worse performances of the six-year-old economic expansion.
Other measures show an even gloomier picture. A gauge of capital expenditures—orders for nondefense capital goods excluding aircraft—declined 3.8% through the first 10 months of the year compared with the same period in 2014, according to government estimates.
Weak investment restrains economic output, one key reason the economy has struggled to grow faster than 2% in recent years. The weakness also saps the economy’s future potential. Capital expenditures are an important ingredient in improving employee productivity, which has grown at an anemic pace in recent years but is critical to workers’ wages and corporate profits.
the article omits any consideration of the toxic mix of stupidly cheap money and tipping point friction costs, including the unfriendly reception given to capital. I also contend that the lack of faith that any tax policy will survive more than a single Congressional session chills the willingness to invest for the long term. The problem isn’t short term thinking of business, it is the short term horizon of policy makers.