Economy: What us worry?

The latest WSJ survey of economic forecasters out today shows only limited concern about the housing market or the prospects of a recession over the next 12 months. What many of them do seem worried about is weakness in business spending.

"If there's something that keeps me up at night, it's the potential of corporate America really pulling back," said Nariman Behravesh at Global Insight. Amid signs the economy has lost steam, businesses have become more cautious in their spending. "We had expected 5%-6% growth in capital spending in the first half of 2007, but now that's down to 1.5%. It probably lowered our GDP forecast by three tenths of a percentage point," Behravesh said.

Business spending? What's up with that? Well, it's been slowing down for some months, in part because of fears about a housing-led downturn (if folks lose money on their homes or have to shell out more in interest, they might not buy other stuff, right?). But with housing troubles not nearly as bad as feared last year, perhaps business will be opening up its wallet a little more. And the probability of a recession? The economists put it at 26 percent, which is unchanged from last summer.


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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
 
Mark Lacter, business writer and editor was 59
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