Scrooge-Like Spending Habits of Business Underlie Fed Worries About Economy

Lack of investment a threat to future U.S. growth

by Jeffry Bartash
Market Watch

One of the worries that keeps Federal Reserve honchos up at night is the weak level of business spending. The reluctance to invest is both a short-term and long-run albatross on the economy.

Don’t expect good news this week. One of the government’s best measures of business spending, known as durable goods, is expected to tumble in May. A pair of secondary reports on business conditions are also likely to be soft.

“Businesses are holding back,” noted Jennifer Lee, senior economist at BMO Capital Markets.

She pointed to a number of reasons: weak global growth, a strong dollar, tough times for U.S. energy producers and manufacturers.

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