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U.S. Businesses Lock Up Their Money

Consumers say they have little hope that the economy will improve, and businesses now appear to share the sentiment. The Financial Times reports that orders for non-defense capital goods excluding aircraft were down this past July for the fourth time in five months.

This is a key sign that businesses are preparing for tough times ahead. In particular, firms are wary of the looming “fiscal cliff,” when businesses can expect to be hit by a combination of tax increases and automatic spending cuts that may hurt consumers’ ability to buy:

“Both the underlying durable goods orders data and the manufacturing (Institute for Supply Management) orders series point to contracting order levels,” said John Ryding and Conrad DeQuadros of RDQ Economics. “This red flag suggests that manufacturing, which had been the mainstay of the recovery, could slow sharply over the coming months . . . and hinder the economy’s ability to pick up from its paltry sub-2 per cent growth rate recorded over the first two quarters of the year.”

The President has spent the better part of four years insisting that things are improving. Clearly, business doesn’t believe him. No one party is alone responsible for the mess, but voters go into the fall election believing that instead of helping the economy, Washington politics are hurting it.

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  • stephen b

    “No one party is alone responsible for the mess”
    Please…Dodd-Frank; Affordable Care Act; Keystone Pipeline; 6 year control of Senate, 4 years control of House, 2 years Senate, House, and White House; no budget in so long I can’t remember last one; I could go on.
    Which party is responsible?

  • Charles R. Williams

    “Party politics are hurting it.” This doesn’t really explain anything. If you want to disguise what you really think you blame process rather than identify the villains in the story. Objectively speaking you have a President pulling the country in one direction and the Republican House pulling in another. The still Democratic Senate wants to lie low. Maybe this election will resolve the issue.

    Compromise rather than clarity is not really in the long term interests of the country. What matters is whether the people make a clear choice to move in the right direction. Deadlock for another two years is not necessarily the worst outcome either.

  • Cromwell

    and how about that consumer confidence number that just printed! 60.6 vs previous 65.9, estimate 66.0!!!!

  • cacrucil

    That’s what you get when you vote for the tea party!

  • Stephen

    Moved > $500K out of the market early in the year when the DJIA > 13K. Haven’t looked back.

  • Sam L.

    Businesses would like some certainty. The certainty they see now says “sit on it”.

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