Search
Capital Spending
Updated June 25, 2005. Private investment growth slowed significantly in 2005 from 2.5% for Quarter 4, 2004 (annualized & inflation adjusted) to 1.3% for Quarter 1, 2005. I expect Quarter 2 and Quarter 3 of 2005 to come in with growth rates of 2.2% and 1.25%, respectively. Investment growth in equipment and software declined from 4.3% in Quarter 4, 2004 to 1.4% in Quarter 1, 2005. I expect investment growth in equipment and software to rise to 2.0% and 1.5% for Quarters 2 and 3 of 2005 respectively. On the other hand, residential investment accelerated for 0.8% growth in Quarter 4, 2004 to 2.1% in Quarter 1, 2005. I expect growth of 2.3% and 0.9% for Quarters 2 and 3 for residential investment respectively. Increases in short term interest rates have already slowed business investment. I expect increases in long term rates in the next 3-6 months to restrain residential investment.