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In 2015 and 2016 American companies stopped making new investments. There weren't many good explanations why. It was che...
26/01/2018

In 2015 and 2016 American companies stopped making new investments. There weren't many good explanations why. It was cheap to borrow money, and companies had savings to spend. It's possible that people were relatively cheap, too -- wage growth was low over the same period -- and so there was little need to buy new machines to make people more efficient.

This morning the U.S. Department of Commerce released its economic growth numbers for the last quarter of 2017, and we can now look back at an entire year of increased spending on gear. Even better, for the last two quarters, that spending has been more diverse. For the first half of the year, high oil prices drove investments in gear to build new fracking wells. Now, companies are buying industrial equipment, trucks and software. And they're building new plants.

When people buy stuff, we get economic growth now. When companies buy equipment, we get it in the future, too.

On trade, the United States just doesn't have the leverage it used to. Our massive domestic market of consumers has alwa...
26/01/2018

On trade, the United States just doesn't have the leverage it used to. Our massive domestic market of consumers has always been the carrot in any trade negotiation -- other countries want to sell stuff to Americans. That carrot is as big as it always was, but there are other big carrots now, too. China doesn't just sell stuff; it buys stuff. And the single biggest import market -- more than twice as big as the U.S. -- is the combined states of the European Union.

Over the last year, the dollar has declined against other currencies. It's not that the U.S. economy is doing poorly -- ...
26/01/2018

Over the last year, the dollar has declined against other currencies. It's not that the U.S. economy is doing poorly -- to the contrary, it's doing well by almost any measure. But all the other major economies are doing well, too. There's just less need to choose the safety of the almighty dollar.

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