Capital Investment Stems Concerns About Recession

As everyone has watched the US housing market tank, concerns over a housing slump fueled recession have grown. There are a lot of chicken littles out there crying recession because of the cascading effect of the poor real estate market on the rest of the economy.

Bloomberg.com reports that there’s not as much to be worried about as some people would have us all think. Over the last period there has been a surge in investment in durable goods – for example computers and machinery. That means companies are investing in their own growth, which translates into jobs and more money flowing into the economy.

Yesterday I talked about how entrepreneurs are going to have to be the ones that pull us through this difficult time. I’m not an economist, but I’d say this flow of cash into the economy is exactly what corporations need to do to keep things strong until home sales improve.

Ironically, manufacturing is also going to be a big part of the stability of the economy. US Manufacturers are exporting goods at a rate higher than normal for this time of year, and that means cash is coming in from overseas. If we can keep up the exports other nations will compensate for the lost cash that we were all getting due to the housing boom.

Let’s hope they can keep it up.

Source: Bloomberg.com