The chart below shows the change in Gross Private Domestic Investment (equipment and software) covering Reagan, Bush I, Clinton, Bush II and Obama. Figures are in $ billions. As you see, capital spending under Obama surpassed all other presidents with the exception of Clinton (but Clinton had the internet boom and Y2K). The two worst periods were under both Bushes and Bush II had the lowest level of business investment despite a supposedly more “business friendly” environment. The claim that businesses are not spending under Obama is not borne out by the numbers.
12 comments:
Uncharacteristically good news. Can't quite figure it out. Why would business be investing with such low expectations/aggregate demand?
Inventory build-up?
Why would business be investing with such low expectations/aggregate demand?
Low borrowing rates bound to have some effect, along with multiplier effect of stim?
Major software/OS upgrade release cycles?
Clinton: Y2K
Obama: Mobile Apps?
? Resp,
the other thing may be that during the Bush 1 and bush 2, most investment went into real estate.
Bush 1 88-92 (S&L Scam)
Bush 2 00-08 (Bank Scam)
I remember feeling like a schmuck having investment real estate in the Clinton years when everybody else was doubling their money in an afternoon in Dr Koop .com!
I guess this means it could just be infrastructure or infrastructure repair for businesses.
Or of course it could mean businesses reaping profits for CEO and not bothering to employ people to make even more.
Are...equipment and software depreciated on balance sheets? If so, are they subject to the accelerated depreciation allowed during the Obama administration? That'd be part of the story.
Yabut this chart reflects only very big business, right? It seems to me that smaller businesses, say 100 or less employees, are not investing right now but probably were during the .com boom?
Why would business be investing with such low expectations/aggregate demand?
In the absence of sales growth, Technology investment to cut costs is about the only margin improvement a manager can deliver.
This may also be tied to the fact that the productivity numbers have been reversing lately which suggests companies are moving production back to the US OR with rising labor costs in China they are no longer able to allocate all the profit to the United States marketing and distribution departments which turns up in US Government reports as lower productivity. So they may be investing in new factories in Vietnam, Malaysia and other places with lower priced labor.
Anon:
Amen!
Norm,
Stephanie Kelton refers to your post in her article - A Preview of Thursday's Jobs Speech: He's Got Nothin'
For Pete's sake, Mike, get a proofreader! So many typos.
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