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Capital spending is very strong





Business investment (new orders for capital goods) fell a bit in April from its March level, but thanks to upward revisions to previously released data, investment was actually up 4% versus the old level for March, and March numbers were revised up by 7%. Thus, as the charts show, capex has grown quite strongly over the past year; stronger in fact than at any time since the series began. I almost hate to say it, because I've said it so many times about different series, but this is clearly a V-shaped recovery, and it's very positive since business investment is what produces the growth and jobs of the future. It's also a good sign that businesses confidence is returning, and profits are being put to good use. There's still a mountain of corporate profits that have accumulated over the years but haven't been spent, so this story could have very long and strong legs; corporate profits after tax have doubled since 1998, but the level of capex spending has not increased at all on net.

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