Business Capital Spending Strong

Business capital spending has been a source of strength in the last few years, and continues to boost the economy.  This is important not only to manufacturers of equipment, but also to everyone else, because with housing weakening, we need other sectors to show strength.

The chart may seem to tell us that it’s all about airplanes, but the green line all by itself is displaying nice growth, 11% in the last 12 months.  Equipment is strong, though computers are starting to show some weakness.

Corporations are in a good position to spend.  The Wall Street Journal has reported strong cash holdings by businesses, profits are holding up, and debt has been paid down.

Business strategy implications: Companies selling equipment (or software and buildings) to other businesses should expect those markets to continue to be strong for another year at least.  A recession triggered by the housing slowdown would hurt, but business equipment would not be the center of the storm.