Should-Read: Cardiff Garcia: US capex, investment, and growth—re-re-upped

Should-Read: Cardiff Garcia: US capex, investment, and growth—re-re-upped: “Srinivas Thiruvadanthai… has passed along his interesting new note about capex… https://ftalphaville.ft.com/2017/06/06/2189480/us-capex-investment-and-growth/

…About the long-term factors that affect capital spending, Thiruvadanthai writes:

Many observers have been puzzled by the capital spending weakness in this cycle in the face of an aging capital stock, relatively high profitability, and strong cashflow. Cashflow and aging capital stock are important influences on capital spending but are overshadowed by capacity and growth expectations. One major influence on weak net private nonresidential fixed investment over the past 15 years has been the growing and pervasive overcapacity…. Industry capacity utilization actually tracks remarkably well with nonresidential net fixed investment throughout history. The current level of capacity utilization suggests that the level of investment is not inexplicably low…