Fiscal Cliff Didn’t Hold Back Business Spending

The Wall Street Journal ^ | 1/30/13 | Neil Shah

[ksen]

Corporate executives warned Washington late last year they were delaying investment plans amid rising uncertainty over the fiscal cliff, raising risks for the economy. Turns out they did nothing of the sort.

In its first analysis of U.S. gross domestic product in the fourth quarter of 2012, out today, the government said the economy surprisingly shrank at an annualized rate of 0.1% between October and December, partly due to a massive one-time drop in defense spending. However, details reveal a bright spot: Business investment in equipment and software — seen as a proxy for corporate spending — soared 12.4% in the fourth quarter, the third-biggest jump since the economic recovery started in the middle of 2009. The fourth-quarter leap more than makes up for the previous quarter’s 2.6% drop and contributed 0.86 percentage point to the nation’s growth late last year — making it one of the biggest positive drivers of the economy.

[ksen]

Looks like there is no such thing as the Confidence Fairy so why do so many "serious people" try to peddle as a reason for austerity? Especially when the evidence coming on from Europe is that austerity makes deficits and the debt-GDP ratio go by hindering economic expansion?

[ksen]

le sigh

corrected for typos and omissions:

“Looks like there is no such thing as the Confidence Fairy so why do so many “serious people” try to peddle it as a reason for austerity? Especially when the evidence coming in from Europe is that austerity makes deficits and the debt-GDP ratio grow by hindering economic expansion?”

[Buckeye McFrog]

It’s all kabuki theater, and these guys know it.

[BfloGuy]

Especially when the evidence coming on from Europe is that austerity makes deficits and the debt-GDP ratio go by hindering economic expansion?

True austerity is cutting the budget to match current tax revenues -- eliminating deficits. The Europeans are combining reductions in spending growth [not cuts at all] with tax increases. That is not austerity; it's a recipe for a business slow-down which will create deficits!

Do not. Repeat: do not believe anything related to economics you read or hear in the mainstream press and that includes the European press, too.