The Return of Capital Spending - BusinessWeek.
I think this is the key to a healthy recovery. Yes, consumer spending comprises 2/3rds of U.S. GDP but consumers won't spend until they have a regained sense of job security. As long as the companies for which they work continue to cut costs to meet earnings estimates, consumers will keep their money in their pockets. When they sense companies are opening their wallets, in the form of increased capital spending, consumers will begin to relax. This is so because it suggests to consumers that companies are becoming more optimistic and are spending to support future growth. Increased spending also suggests a lower probability of future layoffs which means consumers sense of job security improves.
So, this is good news.
I think this is the key to a healthy recovery. Yes, consumer spending comprises 2/3rds of U.S. GDP but consumers won't spend until they have a regained sense of job security. As long as the companies for which they work continue to cut costs to meet earnings estimates, consumers will keep their money in their pockets. When they sense companies are opening their wallets, in the form of increased capital spending, consumers will begin to relax. This is so because it suggests to consumers that companies are becoming more optimistic and are spending to support future growth. Increased spending also suggests a lower probability of future layoffs which means consumers sense of job security improves.
So, this is good news.
