Business Spending Not Picking Up Housing Slack

We posted earlier about the housing slowdown, now dramatically apparent in the GDP numbers. We posted a while ago about how business spending (20 percent of GDP) would have a hard time making up for a consumer (60 percent of GDP) slowdown, but noted last week that the orders and sales for durable goods were stronger than the headline suggested.

Now this. The red bars show the year/year growth in GDP, which has been much smoother than those erratic numbers we get by seasonally adjusting quarterly data and then annualizing it (anyone else think the seasonal adjustments must be a little fishy?) The blue line is business spending on tech equipment and software, which is really starting to look tired.
GDPBusiness.jpg

The mixed data shows why both the Fed and the markets are indecisive of late. For tech spending, it all may rest on acceptance of Microsoft Vista.

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One Comment on “Business Spending Not Picking Up Housing Slack”

  1. [...] Where’s That Pickup In Business Spending? We have discussed previously how the Goldilox scenario many bulls envision relies in part on business spending picking up the slack from any slowdown in consumer spending. This outlook has been the refrain for the last several years, and fortunately consumers have shown a willingness to continue spending more than they earn because the business spending revival remains nowhere to be seen. CDW sales miss forecast; shares fall (Reuters.com) Computer seller CDW Corp. (CDWC.O: Quote, Profile, Research) on Wednesday reported lower-than-expected third-quarter revenue on a decline in sales to business customers, sending its shares down nearly 3 percent.The Web-based retailer, which targets businesses and government agencies, said net sales rose 4.1 percent to $1.74 billion. That wasn’t enough to satisfy analysts, whose average forecast was $1.76 billion, according to Reuters Estimates. [...]

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