January Business Conditions Monthly

Chart 1. Real investment in structures remains below prior peaks.
An improving economy and new fiscal policies may boost spending on structures.

The outlook for the U.S. economy continues to improve. Our index of Primary Leading Indicators rose again in the latest month, the labor market continues to show strength, financial conditions remain favorable, and business and consumer confidence are broadly upbeat.

This month we examine the outlook for spending on structures, one of three major categories of business investment, aside from equipment and intellectual property (see the December BCM for our analysis of spending on equipment, www.aier.org/bcmoverview2016december). Neither private nor public-sector spending on structures has recovered to pre-Great Recession levels (Chart 1). However, increasing economic activity and improved profits should provide a solid foundation for more private investment. For the public sector, promises of greater infrastructure spending were supported by both presidential candidates and many members of both political parties. While governing is very different from campaigning, it would seem likely that politicians could agree on some areas of infrastructure spending policy in coming years.

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1. Overview
2. Economy
3. Inflation
4. Policy
5. Investing




Chart 1. Real investment in structures remains below prior peaks.

Robert Hughes

Robert Hughes joined AIER in 2013 following more than 25 years in economic and financial markets research on Wall Street. Bob was formerly the head of Global Equity Strategy for Brown Brothers Harriman, where he developed equity investment strategy combining top-down macro analysis with bottom-up fundamentals. Prior to BBH, Bob was a Senior Equity Strategist for State Street Global Markets, Senior Economic Strategist with Prudential Equity Group and Senior Economist and Financial Markets Analyst for Citicorp Investment Services. Bob has a MA in economics from Fordham University and a BS in business from Lehigh University.

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