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Username Post: Glad he's fixing the economy        (Topic#537875)
Johnny_Upton
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11-19-12 02:30 PM - Post#1486698    



Investment Falls Off a Cliff
U.S. Companies Cut Spending Plans Amid Fiscal and Economic Uncertainty

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By SUDEEP REDDY and SCOTT THURM

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery.

U.S. companies are scaling back investment plans at the fastest pace since the recession, signaling more trouble for the economic recovery. Sudeep Reddy reports on Markets Hub. Photo: AP.

Half of the nation's 40 biggest publicly traded corporate spenders have announced plans to curtail capital expenditures this year or next, according to a review by The Wall Street Journal of securities filings and conference calls.

Nationwide, business investment in equipment and software—a measure of economic vitality in the corporate sector—stalled in the third quarter for the first time since early 2009. Corporate investment in new buildings has declined.

At the same time, exports are slowing or falling to such critical markets as China and the euro zone as the global economy downshifts, creating another drag on firms' expansion plans.

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Corporate executives say they are slowing or delaying big projects to protect profits amid easing demand and rising uncertainty. Uncertainty around the U.S. elections and federal budget policies also appear among the factors driving the investment pullback since midyear. It is unclear whether Washington will avert the so-called fiscal cliff, tax increases and spending cuts scheduled to begin Jan. 2.

Companies fear that failure to resolve the fiscal cliff will tip the economy back into recession by sapping consumer spending, damaging investor confidence and eating into corporate profits. A deal to avert the cliff could include tax-code changes, such as revamping tax breaks or rates, that hurt specific sectors.

President Barack Obama called a number of business executives over the weekend, including Warren Buffett, Apple Inc. AAPL +6.75% Chief Executive Tim Cook and J.P. Morgan Chase's JPM +2.48% James Dimon, to promote his solution to the looming budget crisis. All sides in Washington, in a departure from a year of deep divisions, have pledged to work together and compromise to avoid going over the cliff.

"The whole world is looking for stability and clarity from the United States," said David Seaton, chief executive of Fluor Corp., FLR +1.64% a large engineering and construction firm. If uncertainty isn't removed, he said, "people will sit on their war chests of cash and return it to shareholders. You'll have a retarded growth trajectory."

Should the White House and Congress strike a deal to avoid the fiscal cliff, the economy could get a boost. "You might very well get a burst of pent-up demand coming at the start of next year," said Paul Ashworth, chief U.S. economist at Capital Economics, a consultancy.

"Given the timing of the drop-off in business investment," he said, "you have to think it's not just a coincidence with the timing of the fiscal cliff."

Unless the business investment slowdown reverses quickly, it could weigh further on growth prospects and the stock market.

Collectively, the members of the Standard & Poor's 500-stock index spent $580 billion on plants and equipment in 2011, according to calculations by the Journal from data supplied by S&P Capital IQ. Spending has run ahead of that pace throughout the year but has slowed in recent months. The latest retrenchment includes such household names as Wal-Mart Stores Inc., WMT +1.10% Ford Motor Co., F +3.24% Boeing Co., BA +1.57% Intel Corp. INTC -0.21% and Walt Disney Co. DIS +0.69%

During the 2007-09 recession, businesses cut back sharply on all kinds of spending. But investment helped propel the recovery, growing faster than the rest of the economy from the second half of 2009, once the recession ended, through the first half of this year. That helped many companies boost productivity and profits without adding new workers.
The Fiscal Cliff

If Congress doesn't reach a budget deal, the U.S. will see across-the-board spending cuts and tax increases for nearly everyone beginning in January 2013. Follow all of the Journal's coverage in The Fiscal Cliff stream .

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The pattern changed in the third quarter, when business investment fell at a seasonally adjusted annual rate of 1.3%, according to a preliminary estimate from the Commerce Department. The latest drop included a decline in investment in structures, such as buildings, at a 4.4% annual rate. Investment in equipment and software stalled after growing at a roughly 5% annual pace in the first six months of the year.

"We have really not seen tailwinds to the economy," said OfficeMax Inc. OMX +1.68% chief executive Ravi Saligram. "When that happens, American businesses focus on productivity. You always prepare for the worst and if things get better, that's great."

The slowdown in capital spending contrasts with a rebound in U.S. consumer spending and confidence, which has returned to a five-year high. Meanwhile, the latest survey by the Business Roundtable, which tracks expectations for sales and investment among its big-company CEOs, found the worst sentiment about the economic outlook in three years.

Consumers may be taking their cues from signs of stronger job growth, lower fuel prices and an improving housing market. Businesses, on the other hand, appear more worried about the future, as profit growth and the global economy slow and the outlook for U.S. government policies remains murky.

The mood appears better among small businesses than large corporations. A survey by the National Federation of Independent Business in October found an uptick in capital spending among small businesses. While overall sentiment among small businesses remains below its prerecession average, it has been resilient in recent months.

Snap-on Inc., SNA +2.39% which makes equipment for auto technicians, reports healthy investment among the 800,000 small businesses it serves across the U.S. "Their confidence is fair and reasonable," said Snap-on CEO Nicholas Pinchuk. "As you move up to bigger companies, their foresight becomes broader and their confidence starts to erode."

Slower global economic growth also is contributing to the investment slowdown. China for example, has reduced demand for coal and other minerals, slowing orders for earth-moving and other equipment from Caterpillar Inc. CAT +2.00%

At the start of the year, Caterpillar expected to spend $4 billion building and expanding factories in Illinois, North Carolina, Texas, China and Thailand, among others. Last month, Caterpillar said it wouldn't reach that target, and expects capital spending to fall next year.

In technology, Intel is facing lower demand for its semiconductors. Intel last month said it would shift idle factory space and equipment into producing its newest chips, reducing its capital spending this year to roughly $11.3 billion, from an earlier projection of $12.5 billion. Chief Financial Officer Stacy Smith told investors last month that spending could fall again next year.

Other technology companies buying less new equipment include Texas Instruments Inc. TXN +1.92% and Harris Corp., HRS +0.30% which has cut capital spending by 46% so far this year, to $44 million from $82 million. Apple said it planned to spend $10 billion on new stores and equipment in the current fiscal year ending Sept. 30, 2013, down from $10.3 billion in the 2011-2012 fiscal year.

Among the companies cutting capital-spending targets, the biggest concentration is in the energy industry, where natural-gas prices are near record lows.

Devon Energy Corp. DVN +1.72% spent $6.2 billion in the first nine months of this year, up 13% from the same period last year, with boosted spending on oil projects.

But capital spending next year will be "significantly less than 2012," particularly in acquiring new leases, Devon chief executive John Richels told analysts.

Write to Sudeep Reddy at sudeep.reddy@wsj.com and Scott Thurm at scott.thurm@wsj.com

Corrections & Amplifications
Harris Corp. is a government contractor that makes technology products. An earlier version of this article incorrectly described Harris as a semiconductor company.
It was down in Louisiana,
Just about a mile from Texarkana,
In them old cotton fields back home.


 
taz
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11-19-12 04:23 PM - Post#1486721    


    In response to Johnny_Upton

It's all coming together for those who voted for him. Misery for everyone.
Large Screen Laptop...$600
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Reading Johnz's inane homer posts...Priceless


 
NYRfan
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11-19-12 04:42 PM - Post#1486726    


    In response to taz

But you will continue to hear that it's "GETTING WAY BETTER", punctuated by more Bush blame and every other excuse.

The guys who said they voted for him and he'd get a couple years to get it right...expanded it to 4, now 5 or 6 obviously, and at the end of 8, they'll be telling the same old stories.


 
clydefrog0371
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11-19-12 08:33 PM - Post#1486777    


    In response to NYRfan

Its getting WAY BETTER and whatever isn't is Bushes fault.
It's going to take between 2-8 years.
"Meet me and my foot"...best threat ever.




Edited by clydefrog0371 on 11-19-12 08:34 PM. Reason for edit: No reason given.
 
Mike
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11-19-12 09:10 PM - Post#1486791    


    In response to clydefrog0371

Blame Bush. That's a great strategy.


 
Tim-
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11-19-12 09:13 PM - Post#1486792    


    In response to Mike

Dude, bush sucks. I make all my girls shave.
"It is not our fault that the world is bad, and we do not want to die changing it. We want to live- that is all."

-Tadeusz Borowski


 
clydefrog0371
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11-19-12 09:25 PM - Post#1486796    


    In response to Mike

  • Mike Said:
Blame Bush. That's a great strategy.



Like blaming Obama for the twinkle factory.
"Meet me and my foot"...best threat ever.


 
Mike
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11-19-12 09:28 PM - Post#1486798    


    In response to clydefrog0371

I didn't blame Obama for the Twinkie factory


 
irish_66
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11-19-12 09:34 PM - Post#1486804    


    In response to Mike

sour fucking grapes.....wah wah wah The republicans send a stiff to run, has no plan, changes his stance more than John Kerry ever did(who the PACS from the right slammed-rightfully so), and the right cry. Tough shit. You arent going anywhere. You dont like the policies, who gives a fuck? Cry, whine and complain-thats a great plan. Christie, Rubio or Jindal win-but they didnt want to grind through the primaries kissing the far right's ass and then have it backfire. Get over the bitterness and hate...life will be happier for you in the long run. Have a good nite.
Gretzky to Hextall after Hexy stoned him on a breakaway in Hexy's first game:"Who the hell are you?"
Hextall's response:"Who the hell are you?"




Edited by irish_66 on 11-19-12 09:42 PM. Reason for edit: No reason given.
 
glockman30
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11-19-12 09:41 PM - Post#1486808    


    In response to irish_66

wow I never thought this was going to happen
You can easily judge the character of a man by the way he treats those who can do nothing for him.
- General Wayne Downing


 
Mike
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11-19-12 09:44 PM - Post#1486809    


    In response to irish_66

  • irish_66 Said:
sour fucking grapes.....wah wah wah The republicans send a stiff to run, has no plan, changes his stance more than John Kerry ever did(who the PACS from the right slammed-rightfully so), and the right cry. Tough shit. You arent going anywhere. You dont like the policies, who gives a fuck? Cry, whine and complain-thats a great plan. Christie, Rubio or Jindal win-but they didnt want to grind through the primaries kissing the far right's ass and then have it backfire. Get over the bitterness and hate...life will be happier for you in the long run. Have a good nite.



And everything you said had what to do with the article Upton posted?


 
irish_66
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11-19-12 09:50 PM - Post#1486810    


    In response to Mike

JU and others are anti Obama...period. Thats fine, but for every article slamming him, anyone can find articles stating how things are on the upswing. Bottom line. JU despises the OA. IMO, who cares....enough of the complaining about how bad he is and how you find an article slamming him. Just like Mitch Mcconnel wants Obama to fail, others here do as well. Get over it. I voted him, Hes here to stay like it or not. Let the bitchfest continue for four years. Good night....
Gretzky to Hextall after Hexy stoned him on a breakaway in Hexy's first game:"Who the hell are you?"
Hextall's response:"Who the hell are you?"


 
Mike
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11-19-12 09:59 PM - Post#1486813    


    In response to irish_66

That makes sense. If you disagree with something say nothing at all. I am sure liberals would do the same if a republican was president. LOL


 
Johnny_Upton
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11-19-12 10:15 PM - Post#1486817    


    In response to Mike

The only articles touting an upswing are fed by the administration.

This isn't all Obama's fault (Those his policies haven't helped), but its funny to see people fall all over themselves trying to either defend his policies or try and state things are getting better.

It was down in Louisiana,
Just about a mile from Texarkana,
In them old cotton fields back home.


 
mtnbiker
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11-19-12 10:38 PM - Post#1486821    


    In response to Johnny_Upton

Agree. Plus, at this point, it's only companies are doing better due to layoffs and expense cutting. We haven't seen increased revenues across the major industries - tech, real estate, consumer staples, etc. The average consumer, the one that does the voting and has to feed a family, is not doing better. The amount of debt that students have coming out of college continues to grow and only exacerbates the woes that they will have entering the workforce.

The "kick the can" mentality of our government (not specifically Obama's fault) will plague our country for a very long time as employer obligations (especially the public sector) continue to be an ever-growing liability.
"This ends tonight!"
"It's daytime you douche."



 
irish_66
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11-20-12 06:40 AM - Post#1486849    


    In response to mtnbiker

no one is falling over themselves. But bias is apparent(as it overtly was when Bush was president). Mike, you call it people disagreeing with a president, I call it bitching as their guy lost and know will look to slam him. Simply put-a bias. To some(and it was very true as well when Bush was president as well), Obama can do nothing right-just pull up the Bin Laden thread for proof-and will bitch for the next four years. Its useless. So now we get the JU's NYR's, Clydes of the site find articles that suit their cause. These guys will post endlessly(just look at the number they post in the political forums). They whine and bitch. I post sparingly here lately because it is pointless with the bias. And in all honesty, I find it humorous that some on the right are so full venom. Get over the loss. Their hatred for the president is too apparent to have legitimate debate. I do like the idea that for their venom, they have to deal with Obama the next four years and WHINE. Enjoy the day.
Gretzky to Hextall after Hexy stoned him on a breakaway in Hexy's first game:"Who the hell are you?"
Hextall's response:"Who the hell are you?"


 
Mike
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11-20-12 07:17 AM - Post#1486855    


    In response to irish_66

I said this after the election and I mean it, I hope Obama succeeds. We can't afford a bad 4 years and as much as I disagree with political views, I don't the hate guy so much that I would want to hurt myself, which is what could happen if Obama is unsuccessful. The way I look at it is he can't run again, so this is it. Whatever happens may it be in the interest of the country and its success.

All that being said, the idea that winning means everyone has to shutup is wrong. Obama has made comments like that and how he has a mandate. He won, fair and square. No argument from me. But even winning the other side got 48% of the vote. To me whenever you win something that close, it means a win in the end, but a need for bipartisanship. If 48 out of every 100 people have an opposing view to the winning team, that's not a mandate IMO. Obama needs to be more bipartisan in this term if he wants success. I realize that's a two way street, but he's the boss. Reagan made that work with Tip O'Neil, Clinton did it with Newt. Bush absolutely failed at this type of arrangement and Obama will be another Bush if it doesn't change.

We should have the right to criticize public policy in this country. Hell, this is just a silly message board, we argue over everything. So whether its an article, abortion, etc. that bugs you, feel free to bring it up. I don't consider it whining (no matter who posts it). Both sides are biased, anyone that claims otherwise is kidding themselves, and the left doesn't get to have the monopoly on bias just because they won. The house is still republican, there are far more republican governors in the US today than democrats. This is a deeply divided country and both sides to deserve the right to bitch.


 
Johnny_Upton
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11-20-12 08:03 AM - Post#1486863    


    In response to Mike

  • irish_66 Said:
no one is falling over themselves. But bias is apparent(as it overtly was when Bush was president). Mike, you call it people disagreeing with a president, I call it bitching as their guy lost and know will look to slam him. Simply put-a bias. To some(and it was very true as well when Bush was president as well), Obama can do nothing right-just pull up the Bin Laden thread for proof-and will bitch for the next four years. Its useless. So now we get the JU's NYR's, Clydes of the site find articles that suit their cause. These guys will post endlessly(just look at the number they post in the political forums). They whine and bitch. I post sparingly here lately because it is pointless with the bias. And in all honesty, I find it humorous that some on the right are so full venom. Get over the loss. Their hatred for the president is too apparent to have legitimate debate. I do like the idea that for their venom, they have to deal with Obama the next four years and WHINE. Enjoy the day.



That’s a complete load of shit

You’ve got an economy that is really at a tipping point for both the short and long term and the President is not showing an iota of leadership. And the line of not working with the President is complete bullshit (Unless by working with you mean bending over).

While you might find it humorous, I think its fucking sad and pathetic that supposed adults have elected individuals that are more concerned about maintain their positions of power and rearranging the deck chairs on the Titanic (and that goes for both parties) Vs actually dealing with the problems

panem et circenses
It was down in Louisiana,
Just about a mile from Texarkana,
In them old cotton fields back home.


 
PuckRogue
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11-20-12 08:12 AM - Post#1486866    


    In response to Johnny_Upton

  • Johnny_Upton Said:
  • irish_66 Said:
no one is falling over themselves. But bias is apparent(as it overtly was when Bush was president). Mike, you call it people disagreeing with a president, I call it bitching as their guy lost and know will look to slam him. Simply put-a bias. To some(and it was very true as well when Bush was president as well), Obama can do nothing right-just pull up the Bin Laden thread for proof-and will bitch for the next four years. Its useless. So now we get the JU's NYR's, Clydes of the site find articles that suit their cause. These guys will post endlessly(just look at the number they post in the political forums). They whine and bitch. I post sparingly here lately because it is pointless with the bias. And in all honesty, I find it humorous that some on the right are so full venom. Get over the loss. Their hatred for the president is too apparent to have legitimate debate. I do like the idea that for their venom, they have to deal with Obama the next four years and WHINE. Enjoy the day.



That’s a complete load of shit

You’ve got an economy that is really at a tipping point for both the short and long term and the President is not showing an iota of leadership. And the line of not working with the President is complete bullshit (Unless by working with you mean bending over).

While you might find it humorous, I think its fucking sad and pathetic that supposed adults have elected individuals that are more concerned about maintain their positions of power and rearranging the deck chairs on the Titanic (and that goes for both parties) Vs actually dealing with the problems

panem et circenses



This exactly.

I was never optimistic that Romney was going to be the next Teddy Roosevelt, but how the hell can anyone defend Obama's first term? I just don't get it. Bush was a lousy president. Obama is a lousy president. The economy is in the shitter mostly because of Clinton, who was a decent president!

-PR
Bee-dee Bee-dee Bee-dee


 
John_P
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11-20-12 11:30 AM - Post#1486913    


    In response to PuckRogue

This could really hurt Obama's chances if he decides to run for a 3rd term.
"And I have no doubt that every new example, will succeed, as every past one has, in showing that religion and gov't will both exist in greater purity the less they are mixed together." James Madison


 
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