U.S.: Capital Spending: The Caution Flags Are Out

Asia woes, weaker profits, and a shaky stock market could curb outlays

Is the 1990s boom in capital spending over? The signs are starting to point that way: The second-quarter slowdown in economic growth, tepid gains in profits, excess factory capacity, and an increasingly shaky stock market are setting up a tough climate for businesses as they try to find room for new projects in their 1999 capital budgets. The implications could be enormous. Given the unprecedented vigor in capital spending during this seven-year business expansion, any slowdown will be felt throughout the economy.

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