Business Spending Forecast

Economic Forecasts

Business Spending Still in a Funk

Kiplinger’s latest forecast on business equipment spending

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Business investment in new equipment continued its gradual decline in December. New orders for communications equipment are showing steady growth, but aircraft orders have plummeted. Spending on new buildings dropped through most of 2019, and has not stabilized yet.

Capital spending is likely in for a prolonged slump because economic growth in the world’s advanced economies is expected to ease in 2020. As a result, spending is expected to be flat in 2020 as a whole, though a modest upward trend is expected in the year’s second half as the global economy strengthens a bit. Among factors dragging down spending in the first half is the coronavirus in China, which will have a small negative effect on U.S. manufacturing exports.

Another drag on spending is that it looks to be midyear before U.S. aircraft maker Boeing will be able to get its grounded 737 Max aircraft certified as safe to return to service. Even when approval is given, the Federal Aviation Administration is requiring that each Max aircraft go through its own inspection process rather than Boeing’s. That is likely to delay the full return of the fleet.

See Also: How to Get Your Small-Business Loan Approved


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