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Economic News, Data and Analysis

The Investment Situation

The current economic situation in the US continues to be mixed. Employment is weak; GDP growth is slow, but positive; consumer spending is holding up, but confidence is down.
What about investment?
The graph below shows that there were signs of life at the end of last year. I would credit the Fed’s decision to lower interest rates over the past year (and to keep them at low levels) with this beginning of a recovery in investment spending.
Will it continue to recover?
Advance data for the first quarter won’t be released until the end of the month. In the meantime, data shows that Industrial Production has stabilized over the first part of the year. Unfortunately, an investment boom seems to me to be unlikely. Even though interest rates continue to be low, the start of the War in Iraq and general geo-political uncertainty will likely keep investment growth at low levels for the first quarter and into the near future.

invest033003.gif

Source: Nat Ec Trends, p. 22

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Filed under: Data, Economy, Monetary Policy, Recession

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