Business Investment Up while Consumer Confidence is Down?

Posted on March 27, 2013 by


Good news about economic growth? While consumer confidence took a nosedive in March thanks largely to continued fiscal uncertainty focused on the sequester, business investment is up in the first quarter of 2013. Although uncertainty over the fiscal sanity of our politicians and unease about the global economy are still very real, some US firms are investing in physical capital and increasing production. Economist’s predictions for economic growth are much more optimistic this month than last.

The fact that we are seeing increases in business investment (the supply side) while consumer confidence is down is a good sign for our economy. The supply side of the economy is the foundation upon which prosperity is built. There is plenty of press for consumers and the role consumption plays in the recovery, but real economic recovery is anchored in production which creates more income and wealth. The uptick in investment is a good harbinger of our economic prospects. The government may well do something to derail economic growth, but increased capital investment is a good sign for US economic health.