U Mich survey's Curtin on the US economy
- Should expect personal spending to remain strong
The lack of business investment should be making economists and the Fed rethink everything. You have given businesses everything the textbook prescribes to drive investment. Businesses can borrow at absolutely rock-bottom rates and credit availability is excellent. Meanwhile, you have a workforce that's more educated than ever and consumer spending is strong.
Yet, no one is investing.
What might generate some risk taking is if you do something that weakens the stock market. Corporate executives have no incentive to take risk because they can borrow cheap and buyback stock, boost the share prices and collect huge bonuses.
What might give them a reason to shake it up and try something new is if the Fed took away the free-money punchbowl.
But what I think will happen is that the Fed will buy more bonds, probably buy corporate bonds eventually and continue to get the same results.
