25 Mar 2015

 

For many consumers, savers and investors, the current economic recovery in the United States feels different from prior periods of economic expansion—less boom and more belabored. And there’s good reason for that. Not only are financially strapped consumers hesitant to spend, but even cash-rich companies have been judicious in their capital expenditures (capex).

The BlackRock Global Allocation team discusses the recent trend in capex, how it impacts the economy and what it means for investment decision making.

Below are the findings:

  • Risk aversion equates to lower spending. Households and corporations have maintained fiscal prudence in the wake of the 2008 global financial crisis, and this means less spending to feed the economy.
  • Capex has improved. The good news is that corporate capex, though below levels seen in prior recoveries, has finally returned as a positive contributor to U.S. gross domestic product (GDP).
  • The advent of smart capex. While overall capex is unlikely to accelerate toward prior peaks in the next decade, a trend is emerging whereby businesses are investing with greater efficiency. Companies implementing this so-called “smart capex” represent compelling investment opportunity.

 

 

capex back above average

 

 

 

 

pdf icon

Read Full Article

 

 

 

 

 

 

In Singapore, this material is issued by BlackRock (Singapore) Limited (company registration number: 200010143N). Investment involves risks. Past performance is not a guide to future performance. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Any opinions contained herein, which reflect our judgment at this date, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This material is for informational purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock fund and has not been prepared in connection with any such offer. Any research in this material has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. BlackRock® are registered trademarks of BlackRock, Inc. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. © 2015 BlackRock Inc. All rights reserved.