The fiscal cliff: While the government teeters, investment jumps off

posted at 4:01 pm on November 19, 2012 by Erika Johnsen

Excellent news, everybody: American businesses are now scaling back on investment plans at the fastest pace since the official recession — and seeing as how investment is a very basic and key driver of economic growth, I’d say that that doesn’t bode too well for our weaksauce ‘recovery.’ Who could’ve seen this coming?

Half of the nation’s 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined. …

Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

The WSJ notes that other economic indicators, i.e. consumer spending and confidence, are at recent highs, but that consumers are likely taking their cues from things like the gradual improvements in the housing market and lower fuel prices. The downshift in capital investment means that big businesses are looking further into the future, and not liking what they’re seeing. There’s a distinct lack of optimism about the prospects in a continuing global economic slowdown and the uncertainty of the United States’ pending policy decisions, so companies and investors are going small rather than risking big.

If the government manages to navigate us around the fiscal cliff, there may be a short-term burst of pent-up investment energy, but how long can that last? With global governments still trying to solve their massive fiscal problems by Robin-Hooding the wealthy instead of balancing their budgets, how long can any of it last?


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faraway on November 19, 2012 at 4:05 PM

I work for one of the largest private corporations in the country. Pretty liberal company, in fact… but yeah, turns out we’re not opening those 2 new branches over the winter that we were planning on doing. The plans have been shelved indefinitely.

Not that I have any insight into the CEOs office, but as of end of October, we were full steam ahead on expanding… as of mid november, we were putting every thing on hold.

Not sure what could have changed…

Timin203 on November 19, 2012 at 4:05 PM

What could go worng?

trigon on November 19, 2012 at 4:07 PM

Businesses are not going to invest during the rule of a communist regime that has only one goal in mind: Destroy Capitalism…

mnjg on November 19, 2012 at 4:07 PM

The HA headlines have a thread “What cliff?”.

This is just the very start.

Schadenfreude on November 19, 2012 at 4:10 PM

Let it burn!

dczombie on November 19, 2012 at 4:11 PM

I work for one of the largest private corporations in the country. Pretty liberal company, in fact… but yeah, turns out we’re not opening those 2 new branches over the winter that we were planning on doing. The plans have been shelved indefinitely.

Not that I have any insight into the CEOs office, but as of end of October, we were full steam ahead on expanding… as of mid november, we were putting every thing on hold.

Not sure what could have changed…

Timin203 on November 19, 2012 at 4:05 PM

I assume that your company top leaders are Limousine Liberals… These people are the biggest hypocrites on the planet and they love money and profit more than anyone else love money and profit despite saying the opposite in public specially in term of loving to pay more taxes…

mnjg on November 19, 2012 at 4:12 PM

This is a great time to sit on cash and buy some discount stock in a week or two.

For those of you who are funemployed, you can make some quick cash legally. X

CorporatePiggy on November 19, 2012 at 4:13 PM

Let it…. you know.

The Rogue Tomato on November 19, 2012 at 4:14 PM

Does anyone remember what happened the last time we put the socialists in national office for several terms?

Galt2009 on November 19, 2012 at 4:15 PM

I assume that your company top leaders are Limousine Liberals… These people are the biggest hypocrites on the planet and they love money and profit more than anyone else love money and profit despite saying the opposite in public specially in term of loving to pay more taxes…

mnjg on November 19, 2012 at 4:12 PM

Yeah, I mean they’re certainly not homeless dirty hippies or welfare queens. I’ve met some of the C – level folks… they’re all pretty nice, most seem to be managers rather than leaders… I think they more vote / think democrat because they’re all terrified of fulfilling “that stereotype.” I don’t think they have any deep ideological bonding with liberals, they just know its the path of least resistance, plus they get cred with the chicago gang for donating all kinds of money to their pet projects

Timin203 on November 19, 2012 at 4:16 PM

This is our future:

For Greeks, Crisis Reverses a Generation of Progress
http://online.wsj.com/article/SB10001424127887324439804578107181181360370.html

After nearly five years of grinding recession, which has sent unemployment above 25%, Greece’s development engine is running in reverse. Families that had clawed their way into the middle class in the decades after World War II are slipping painfully backward.

Out-of-work professionals and tradesmen are moving back in with aging parents or returning to ancestral villages. Others are going back to the kind of dirty or dangerous jobs, as shepherds or deckhands on ocean-going freighters, that Greeks had largely abandoned as their country grew more affluent. Some are leaving Greece.

Galt2009 on November 19, 2012 at 4:18 PM

Why invest? The government’s going to take the money anyway.

GarandFan on November 19, 2012 at 4:18 PM

O/T,
Per Fox it seems that a judge has ordered hostess and the union thugs to work things out? Look out hostess, you are being set up? Can’t have bho/trumka/union thugs out of work now can we?

http://www.foxnews.com/us/2012/11/19/hostess-union-hopes-buyer-will-put-employees-back-to-work/
L

letget on November 19, 2012 at 4:19 PM

We’re Heading For Economic Dictatorship

Resist We Much on November 19, 2012 at 4:13 PM

IIRC, that is exactly what Obama campaigned on.

Let the Unification begin!

tom daschle concerned on November 19, 2012 at 4:20 PM

More misery

Schadenfreude on November 19, 2012 at 4:20 PM

Half of the country could be out of work and 75% of the factories shut down, and President Choom and his lame-stream-media lackies would still be proclaiming that the recovery is going just fine.

RoadRunner on November 19, 2012 at 4:21 PM

Geithner wants an “unlimited debt ceiling”.

From the housing thread – it’s perfect Archivarix

Another example is the perpetual Progressive annihilation of the public school system. Lower income kids and families hardest hit. It didn’t used to be this way.

visions on November 19, 2012 at 2:11 PM

The last **ck I gave about lower income families sailed out of port on November 7, 2012. They voted for a president of a banana republic, they’ll learn to eat a banana. As I always tell my kids, the penalty for thinking with one’s arse is inevitable, if sometimes delayed.

Archivarix on November 19, 2012 at 2:26 PM

Schadenfreude on November 19, 2012 at 4:23 PM

The WSJ notes that other economic indicators, i.e. consumer spending and confidence, are at recent highs, but that consumers are likely taking their cues from things like the gradual improvements in the housing market and lower fuel prices.

Anyone who honestly believes that consumer confidence is up needs to STFD and STFU forever. Media talking points are not reality. This is not an improvement in consumer confidence, it’s simply taking advantage of a perceived momentary advantage in purchasing power.

SWalker on November 19, 2012 at 4:24 PM

Oil price up $2.27 today alone! $89.18 a barrel

CoffeeLover on November 19, 2012 at 4:25 PM

Only slightly OT:

Florida Governor Scott Drops Opposition to Health Law

Akzed on November 19, 2012 at 4:30 PM

Half of the country could be out of work and 75% of the factories shut down, and President Choom and his lame-stream-media lackies would still be proclaiming that the recovery is going just fine…. RoadRunner on November 19, 2012 at 4:21 PM

…and it’s Bush’s fault.

Akzed on November 19, 2012 at 4:36 PM

Let’s hold hands and belly flop off the cliff together—ALL IN!

hillsoftx on November 19, 2012 at 4:40 PM

Let it burn!

dczombie on November 19, 2012 at 4:11 PM

Hard for it not to burn when these progressive fanatics are the ones deliberately setting the whole system on fire.

There can be little doubt this isn’t deliberate.

Yakko77 on November 19, 2012 at 4:41 PM

There will have to be true misery before things can really change. People ignored the 8% unemployment and economy because their needs were met with food stamps, welfare checks, extended unemployment and a roof over their heads provide by us the makers of this country. Every Obama voter on the dole had a big screen TV, car, cell phone, Internet, a computer, video games and more. They feel no pain and get benefits. Until they have skin in the game and feel some pain, nothing with change.

Make plans to take care of you and your family and then welcome the jump off the cliff. Unfortunately, the republicans will likely blink and take the blame on top of it.

Rockshine on November 19, 2012 at 4:42 PM

The Dem party only benefits from the failures they create so expect more failure.

MechanicalBill on November 19, 2012 at 4:42 PM

The WSJ notes that other economic indicators, i.e. consumer spending and confidence, are at recent highs, but that consumers are likely taking their cues from things like the gradual improvements in the housing market and lower fuel prices.

Recent highs? Yeah, I’m sure the Christmas shopping season has nothing to do with that consumer spending. Look for it to drop back down after the holidays and peoples feelings of “cheerful giving” are replaced with the reality of the situation.
Do we really have to tell the WSJ this?!

BTW, Thanks a heap, Obama voters.

Sterling Holobyte on November 19, 2012 at 4:47 PM

John Galt lives; capitalism is dead!

michaelo on November 19, 2012 at 4:48 PM

It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

The Wall Street Journal defines the “fiscal cliff” as tax increases and spending cuts scheduled for Jan 2?

That’s their cliff?

Axe on November 19, 2012 at 4:49 PM

Eternally delusional hack

Schadenfreude on November 19, 2012 at 4:49 PM

And it is not just day-to-day life that would be affected by the absence of growth in the economy. In the longer term, we can say good-bye to the technological innovations which have been spurred by competitive entrepreneurial activity, the medical advances funded by investment which an expanding economy can afford, and most poignantly perhaps, the social mobility that is made possible by increasing the reach of prosperity so that it includes ever-growing numbers of people.

So help me, within the will of God, I’m finishing what I started if I have to do it in a smoking ruin, standing on a pile of zombies.

Just thinking out loud.

http://predicthistunpredictpast.blogspot.com/2012/11/were-heading-for-economic-dictatorship.html

Axe on November 19, 2012 at 4:53 PM

Not to mention the higher capital gains I would have to pay on my investment (if I’m lucky to get a return!). I’m cashed out completely on the 1st thank God. I shifted into physical PM’s and I brought a new 1911 because I could (how much longer on that however??).

Now I’m just going to wait for the panic to really get going.

L.I.B.

VikingGoneWild on November 19, 2012 at 4:55 PM

because their needs were met with food stamps, welfare checks, extended unemployment and a roof over their heads provide by us the makers of this country.

Rockshine on November 19, 2012 at 4:42 PM

and that just about sums it up…….

VikingGoneWild on November 19, 2012 at 4:57 PM

family has decided not exchange Christmas gifts this year, and the wife and I won’t be getting each other anything. purchases for the kids is getting cut way back. charitable giving is over. give the voters what they asked for, and we’ll see how well the govt makes their dreams come true…

burserker on November 19, 2012 at 4:59 PM

The WSJ notes that other economic indicators, i.e. consumer spending and confidence, are at recent highs,

So, since Americans have recently begun dipping once again into their credit cards at a greater pace and thus creating more debt, that’s a positive thing. With this debt-based mentality we have anymore, I suppose it is positive.

Dr. ZhivBlago on November 19, 2012 at 4:59 PM

L.I.B. LET IT BURN
I am sorry to say this I think that the Christmas shopping season is going to be miserable for retailers. You want to see how frightened these people are, They are already into their sales, some up to 70%.
It is going to go down, so we have pulled back on any spending. We have cut our usage of everything, drop the thermostat to a lower temp.
changed all our light bulbs slowly over to LEDS so we are spending pennies on energy. I pulled back my business proposal and know of a number of small business owners who are shutting down or cutting the number of employees way down just to survive. Get prepared, hold on and invest in precious metals, gold, blue steel and flying capable lead projectiles.

Remember Benghazi
Ignore Obama

stormridercx4 on November 19, 2012 at 5:02 PM

Meanwhile over on HuffPo the Commies are lauding Obama as being a financial genius because the Dow Jones went over 200 today…aren’t they supposed to be occupying it that rather than saying how great it is?

Dr. ZhivBlago on November 19, 2012 at 5:20 PM

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

Um, the so-called “fiscal cliff” has nothing to do with whatever agreement Congress may make in the next few weeks. It’s about debt and deficits. That problem won’t be solved any time soon; in fact, it’s pretty much inevitable now. Just a matter of time, and not much more, either.

disa on November 19, 2012 at 5:20 PM

Global economic dictatorship

Schadenfreude on November 19, 2012 at 5:21 PM

Hey ignorami who voted for Obama — this is what happens when Leftists run governments. Why would any business expand or take risks right now?

But you don’t care. As long as there are printing presses in the Treasury Department, right?

Let it Burn.

rrpjr on November 19, 2012 at 5:22 PM

Meanwhile over on HuffPo the Commies are lauding Obama as being a financial genius because the Dow Jones went over 200 today…aren’t they supposed to be occupying it that rather than saying how great it is?

Dr. ZhivBlago on November 19, 2012 at 5:20 PM

the imbeciles don’t even know what a margin spike is let alone what one means.

SWalker on November 19, 2012 at 5:24 PM

family has decided not exchange Christmas gifts this year, and the wife and I won’t be getting each other anything. purchases for the kids is getting cut way back. charitable giving is over. give the voters what they asked for, and we’ll see how well the govt makes their dreams come true…

burserker on November 19, 2012 at 4:59 PM

No Christmas gift-giving for our family, either. Everybody will get a stocking with some candy, nuts and small gag gifts.

trigon on November 19, 2012 at 5:40 PM

This is a great time to sit on cash and buy some discount stock in a week or two.

For those of you who are funemployed, you can make some quick cash legally. X

CorporatePiggy on November 19, 2012 at 4:13 PM

You don’t really understand currency devaluation, do you?

woodNfish on November 19, 2012 at 6:15 PM

We live in a new political reality. The 47% vote for the free lunch over country or economics. Once a nation hits that point, the only way back is after the inevitable crash….

JIMV on November 19, 2012 at 6:17 PM

I’ve seen more than a few people here say they’re going to look into signing up for as many free shit government programs as they can — and I think that is a damn fine idea. Become a taker, not a maker. The pay is better. Get your free shit now while you still can. And to make things extra easy, the federal government has a handy set of links — aimed at “immigrants” — to get you started on your journey to a government check, or two or three. Start here to see what you qualify for. Seriously.

Rational Thought on November 19, 2012 at 6:27 PM

Benefits.gov – Your Path to Government Benefits

Sounds nifty!

And, according to their Erma Bombeck/Giving thanks link, the choco ration’s going up 17 grams in 2013!!!

Dr. ZhivBlago on November 19, 2012 at 6:42 PM

This is just the very start.

Schadenfreude on November 19, 2012 at 4:10 PM

{sigh, mental depression set’s in}

socalcon on November 19, 2012 at 6:51 PM

RoadRunner on November 19, 2012 at 4:21 PM

So long as enough dummies are working and paying taxes to pay for entitlements, payoffs to BO’s bundlers and Barry and Mooch’s vacay what’s the problem. We got Obamaphones, EBT and soon – free health care! What’s the worry? It’s FREEEEEE!!!!!!!

ghostwalker1 on November 19, 2012 at 6:58 PM

we just need to adjust…when asked “what should we do for dinner?”, just give a number instead of a description (e.g. “let’s do #19 with egg rolls” instead of “meatloaf and gravy”).

teejk on November 19, 2012 at 7:25 PM

Kindling for the fire. LiB

royzer on November 19, 2012 at 7:43 PM

There will have to be true misery before things can really change. People ignored the 8% unemployment and economy because their needs were met with food stamps, welfare checks, extended unemployment and a roof over their heads provide by us the makers of this country. Every Obama voter on the dole had a big screen TV, car, cell phone, Internet, a computer, video games and more. They feel no pain and get benefits. Until they have skin in the game and feel some pain, nothing with change.

Make plans to take care of you and your family and then welcome the jump off the cliff. Unfortunately, the republicans will likely blink and take the blame on top of it.

Rockshine on November 19, 2012 at 4:42 PM

So true.

We had already been planning an austerity holiday at the request of other family members. We wound up with a little cushion, so we went to Manhattan yesterday. Usually 5th Avenue (just looking) is impenetrable this time of year due to pedestrian traffic-it was empty. Broadway-less than 50% of the usual pedestrian traffic level. Got show tickets at TKTS. Went to Sardi’s after the show-no reservation, no wait, not full, Sunday at 6 pm.

This is going to be one ugly retail holiday season.

There probably isn’t any way for the government to salvage the economy at this point, so the Republicans would do themselves the best service by voting present and letting the Democrats own the fiscal situation.

talkingpoints on November 19, 2012 at 7:56 PM

letget on November 19, 2012 at 4:19 PM

I wonder who the judge is?
If a business chooses to liquidate who is a judge to say they can’t do it?

On the one side you have unions saying “If you don’t___we’ll___” And they threatened party says..”O.K. screw you.” And a judge steps in?
Looks like two against one.

Mimzey on November 19, 2012 at 8:18 PM

Yeah, we’re cutting way back on christmas this year. Used to spend about 3-4k (mostly on all the necessities for the coming year, it seemed more fun to wrap all the hightech, or clothes and supplies and open them rather than buy them little by little throughout the year) but now, we’re just cutting way back. In fact, we’re just not buying any of it and we’re also cutting back on charity since we just don’t have as much money.

WashingtonsWake on November 19, 2012 at 8:39 PM

I see recession in 2013. Any deal that comes about is going to be increased taxes and phony cuts. The GOP needs to accept real cuts to the DoD in exchange for real cuts elsewhere. The GOP also needs to accept that taxes will increase and should just try to limit the damage by exchanging lower rates (or lower increase in rates) for fewer deductions, exemptions and credits. Best of all would be if they can obtain the kind of cap that Romney proposed on deductions.

MJBrutus on November 20, 2012 at 7:18 AM

The GOP also needs to accept that taxes will increase and should just try to limit the damage by exchanging lower rates (or lower increase in rates) for fewer deductions, exemptions and credits. Best of all would be if they can obtain the kind of cap that Romney proposed on deductions.

MJBrutus on November 20, 2012 at 7:18 AM

I don’t think we’re going to be getting any kind of grand bargain here. The Dems aren’t interested in negotiating, theyre interested in posturing. We’re going to get screwed on whatever the deal is so I’d hope the deal is as small as possible.

alwaysfiredup on November 20, 2012 at 11:47 AM