Please enable JavaScript to view the comments powered by Disqus.

Economic Forecasts

Moderate Growth for Business Spending in 2017

Kiplinger's latest forecast on business equipment spending


GDP 2.1% growth in ’17, following 1.6% in ’16 More »
Jobs Hiring pace should slow to 160K/month in '17 More »
Interest rates 10-year T-notes at 3% by end '17 More »
Inflation 2.4% in '17, up from 2.1% in '16 More »
Business spending Rising 3%-4% in ’17, after flat ’16 More »
Energy Crude oil trading from $55 to $60 per barrel in May More »
Housing Single-family starts up 9% in '16, 11% in '17 More »
Retail sales Growing 3.9% in '17 (excluding gas) More »
Trade deficit Widening 4% in '17, after nearly flat '16 More »

Continuing modest recovery in U.S. manufacturing activity is brightening the outlook for U.S. business spending this year. Orders for core capital goods, such as machinery and communications equipment (including computers), now have risen for two consecutive quarters after a lengthy period of weakness. Anticipation that the Trump administration plans a huge fiscal stimulus, including up to $1 trillion on infrastructure projects, is further buoying hopes that an investment pickup this year will accelerate in 2018.

It won’t be a boom, but a 3%-4% increase in overall business spending this year will be a boost for the economy after an essentially flat 2016. Still, there are a couple of reasons for keeping hopes for a bigger investment increase in check. First, the global economic outlook is only a little better for 2017 than it was for 2016, in part because of uncertainty about Europe’s prospects as Britain prepares to pull out of the European Union. In addition, U.S. trade policy is in flux as President Trump spurns multilateral trade pacts in favor of bilateral deals. Secondly, the U.S. dollar continues to strengthen against other major currencies, making U.S.-manufactured goods pricier in foreign markets.

See Also: All Our Economic Outlooks

Bookings for nonmilitary equipment excluding aircraft gained 0.8% during December, after a 1.5% November rise. Shipments of finished goods — a measure of how busy factories are — gained 1%, following a 0.8% November pickup. That’s consistent with other government data showing more hiring by manufacturers as 2016 ended, and a generally more confident tone among business managers about future business. Along with the expectation of more infrastructure spending, businesses hope that the Trump administration and Congress will reduce the domestic tax burden and slash some of the regulatory burdens that they face.


Orders for commercial aircraft, motor vehicles and parts remained strong going into 2017. Defense orders slumped sharply but they are volatile from month to month. Looking out further into the year, odds favor a pickup in orders from the oil and gas industry as firmer energy prices prompt modestly stronger exploration and production activity.

See Also: Small-Business Success Story: Spicing Up an American Classic