Rebound in investment follows increases in output, cash flow

According to a survey by the Bureau of Economic Analysis, real capital expenditures by US nonfarm businesses in 1984 will surpass the 1979 peak, but investment will still be below previous heights relative to gross national product (GNP). Industries planning the largest increases in capital spending...

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Bibliographic Details
Published in:Business America 1984-04, Vol.7 (7), p.24
Main Authors: Ortner, Robert, McKittrick, George
Format: Article
Language:English
Subjects:
Borrowing
Capital expenditures
Capital investments
Cash flow
Corporate finance
Forecasts
GNP
Gross National Product
Interest rates
Investments
Statistics
Surveys
United States economic conditions
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Summary:According to a survey by the Bureau of Economic Analysis, real capital expenditures by US nonfarm businesses in 1984 will surpass the 1979 peak, but investment will still be below previous heights relative to gross national product (GNP). Industries planning the largest increases in capital spending include aircraft, motor vehicle, and machinery producers. The recent and prospective vigor of capital investment reflects both need and enhanced cash flow to pay for modern plant and equipment. The 18.5% climb in industrial output during the first 15 months of the recovery has lifted utilization of existing capacity from the postwar low of 69.6% to 82.4%. Cash flow of domestic corporations climbed 31.5% during 1983, and by the end of that year, adequacy of internal funds to finance expansion no longer was certain. Increased business borrowing tends to impel interest rates upward, but perhaps not enough to dampen consumer and business borrowing soon. Action to reduce budget deficits will make credit market conditions better.
ISSN:0190-6275