Business Investment: Gloom Sets In

The Lehmann Letter (SM)
  
Lately there have been too many signs of sluggish or nonexistent growth: Home building, new-vehicle sales, consumer confidence. We need exuberance to herald robust recovery. It’s not there.
Are we locked in a range? Eventually we will no longer be able to say, “It’s too soon to tell.”
Business investment in new equipment had been a rosy exception to households’ reluctance to purchase tangible assets.
This morning the Census Bureau reported approximately $70 billion in new orders for nondefense capital goods for May.
New orders have been stuck at around $70 billion for several months. The chart tells you we should be breaking through $80 billion, on our way to $100 billion. Instead – as is true for so many household reports – we’re resting on a plateau.
New Orders for Nondefense Capital Goods

(Click on chart to enlarge)

(Recessions shaded)


This is a bad omen. Where is the growth we’ve come to expect and rely upon? Are we locked in a range? Eventually we will no longer be able to say, “It’s too soon to tell.”

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© 2012 Michael B. Lehmann