Business investment is a great way to feed the economy and ensures your company is operating at its full potential. This year we have already seen the highest rates of increased business investment since 2011. What we wonder now though is if it will last. Business investment ensures employees are working to their highest potential and increases potential profit. In turn after the investment, workers are being more productive and there are higher profits which lead to higher pay checks. Depending on rates this can increase other investment and saving for workers. Do you think we will continue to see a rise in business investment?
http://www.marketwatch.com/story/heres-the-kind-of-spending-that-leads-to-bigger-paychecks-and-a-roaring-economy-2017-10-21
I believe we will continue to see a nice level of business investment and hopefully see increases in the future. Looking at the earnings reports it seems that most companies are reporting decent numbers which will hopefully lead to more investors coming in. However, anything can happen and the economy can change quickly
ReplyDeleteImproved capital goods increase labor productivity. Increased capital investment allows for more research and development in the capital structure. This expanding capital structure raises the productive efficiency of labor. As labor becomes more efficient, more goods are produced; a higher GDP is realized and the economy sees growth!
ReplyDeleteInflation rates in the United States have reached a plateau recently, which might be an indication that there will be a decrease in business investment. The problem with low inflation is that consumers believe that prices wont, or shouldnt go up. Then, companies have a hard time raising their prices in order to increase their employees pay checks. The lack of wage growth makes consumers less likely to spend their hard earned cash which ultimately slows the economy. It will be interesting to see how much consumer spending impacts business investment.
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