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– December 13, 2016

The improvement in consumer expectations has been linked to the presidential election, though it’s not clear if the election result or just the end of campaigning is the cause. Consumers remain the engine of growth, and fundamentals such as a strong jobs market and improving sentiment are key supports.

Business investment overall and real new orders for nondefense capital goods excluding aircraft (core capital goods) have been weak for some time. A major drag has come from the energy sector. Investment spending by the energy industry collapsed along with crude-oil prices between mid-2014 and the end of 2015 (Chart 1). But the recent rebound in crude-oil prices should bolster energy investment and reduce the drag on overall business investment.

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[pdf-embedder url=”https://www.aier.org/wp-content/uploads/2016/12/BCM_December2016.pdf“]

AIER Staff

Founded in 1933, The American Institute for Economic Research (AIER) educates people on the value of personal freedom, free enterprise, property rights, limited government, and sound money. AIER’s ongoing scientific research demonstrates the importance of these principles in advancing peace, prosperity, and human progress.

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