Business investment in the post WWII period

Here is a breakdown of private investment (and components) in the post WWII era. As you can see from the chart, Obama, in three and a half years, has faired pretty well with the exception of residential investment. In contrast, there was a residential boom under Reagan. George W. Bush got blown away in just about everything due to the financial crash. Rounding out, Nixon, Ford, Carter saw pretty good investment with Carter seeing a sharp increase in private non-residential as oil and gas prices were deregulated. (*Change in business inventories not included.)

No deficit dogma in China

China's premier calls for more deficit spending in reaction to the slowdown in growth.

BEIJING (AP) -- China's premier outlined plans Monday to fuel domestic consumption, including subsidies for social programs and higher spending for businesses, as the government grapples with a slowing economy and rising public demands for greater fairness.

China does what it must in order to keep growth and employment at the desired level without the distortion of deficit hysteria or the nonsense of "fiscal sustainability."

Private investment contribution to GDP over the business cycle — Calculated Risk

Those familiar with MMT know that the domestic private sector balance is comprised of consumption and investment and that the shifting level of business investment and firm saving is a key contributor to the sectoral balance identity, in that investment creates income, thereby adding to effective demand, while saving constitutes demand leakage. Calculated Risk investigates the contribution of private investment over the business cycle.

Discussions of the business cycle frequently focus on consumer spending (PCE: Personal consumption expenditures), but one key is to watch private domestic investment. Even though private investment usually only accounts for about 15% of GDP, private investment experiences significantly larger swings than PCE during the business cycle and has an outsized impact on GDP. Note: currently private investment is just over 12% of GDP - much lower than normal.

Read the rest at Calculated Risk
Private Investment and the Business Cycle

Enough already with the, "business is not spending because they're afraid of Obama's policies," nonsense.

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.