Shipments of core capital goods, a measure that excludes defense spending and aircraft — a common measure of business investment — fell 0.4 percent in October, according to the Commerce Department.
The likely explanation: Firms were becoming wary of what might happen with the “fiscal cliff,” the wave of tax hikes and spending cuts scheduled to take effect on Jan. 1 absent a new agreement. If you are a corporate executive weighing the purchase of a piece of industrial equipment or a truck for your delivery fleet, you may well decide “I’ll just wait to see how all this shakes out.”
Ironically, that’s one of the best hopes for the economy. Because fiscal-cliff fears that dampen spending create pent-up demand, and imply a nice bounce back early in 2013 after Congress and President Obama strike a deal.
But there is reason to fear that more-fundamental problems held back business investment in October.