One of the problems of the post-recession world is that despite the record profits and continued improving margins, many businesses didn’t actually reinvest in their firms.
Or at least not in a traditional way. Capital spending or CAPEX has been pretty poor since the end of the downturn as many businesses have pivoted to investing in technology or have sought growth through buyouts and SG&A cost reductions. Some economists have postulated that this lower CAPEX spending is why the recovery was less than stellar.
But that seems to be changing.
CAPEX spending is surging this year and that’s helping fuel rising economic growth as well as continued returns in the market. The best part is that the spigot is just starting to be opened, which could continue to support growth for many more months.
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