In looking at the BEA’s latest GDP figures for the second quarter of 2014, one thing that leapt out at me was something I’ve been waiting for a long time:
Real nonresidential fixed investment increased 8.4 percent in the second quarter, compared with an increase of 1.6 percent in the first. Investment in nonresidential structures increased 9.4 percent, compared with an increase of 2.9 percent. Investment in equipment increased 10.7 percent, in contrast to a decrease of 1.0 percent. Investment in intellectual property products increased 4.4 percent, compared with an increase of 4.6 percent. Real residential fixed investment increased 7.2 percent, in contrast to a decrease of 5.3 percent.
That is a whopping increase, a long time in coming. Note especially the 11% increase in equipment investment and the 9% increase in nonresidential structures. That’s exactly what we need to get the economy moving again.
Other portions of the economy are less spectactular. Our trade picture is actually worsening which, in a weird way is kind of encouraging. Our balance of payments almost always worsens when the economy is improving. But government spending, PCE, and so on are nothing to write home about. It’s the BI that’s booming.
The question on my mind is why now? Are they expecting a shoe to drop?