Posted on 06/08/2009 6:16:04 AM PDT by SeekAndFind
United Airlines is planning a major purchase of new airplanes in the next few years, a sign that corporate America may once again be developing an appetite for new investment.
Businesses have dramatically pared back their spending over the past nine months, reluctant to make any investments in new plants, equipment or software. There have been many reasons -- loans and other financing have been hard to come by, businesses have less cash to work with as sales drop and, more than anything, they have been fearful of just how bad and how long the recession will turn out to be.
In the first three months of the year, investment in commercial structures plummeted at a 36.9 percent annual rate and investment in equipment and software fell at a 33.5 percent rate, according to Commerce Department data. Spending on transportation equipment has been particularly hard hit; in the first quarter, it was 67 percent lower than at the beginning of 2007 and reached its lowest level since 1970, even when adjusted for inflation.
Businesses are still being extraordinarily cautious, economists and other experts said. But there are emerging signs that companies are more open to taking the plunge on new investments than they were a few months ago. United's decision to buy new wide-body aircraft, disclosed yesterday, happens to be the most high-profile such investment.
The business investment environment was dismal through at least April, said Kenneth E. Bentsen Jr., president of the Equipment Leasing and Finance Association, whose members provide funding for businesses that need equipment. "But now there are a few inquiries and indications of demand and applications for borrowing," he said.
"It's very tentative, but it sounds like businesses are starting to come back and think about investing in plants and equipment," Bentsen said
(Excerpt) Read more at washingtonpost.com ...
They best wait until it’s confirmed that O will tax transatlantic flights to combat global warming.
With business travel down, and taxes about to increase across the board this may not be the best time to make any investments.
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