Such spending is viewed positively by the Fed, whose ``new motto is, `In Productivity We
Trust,''' said David Orr, chief economist at First Union Corp. in Charlotte.
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Productivity Matters
Today's report suggests money is flowing where the Fed wants to see it go. Non-residential
investment, which includes commercial construction and business equipment and software, rose
at a 19.1 percent annual rate in the second quarter after a 21 percent gain in the first.
Investment in equipment and software alone grew at a 21 percent rate after a 20.6 percent pace
in the first quarter. Those were the fastest rates since that kind of investment rose at a 24.6
percent clip in the first quarter of 1998.
Such spending is viewed positively by the Fed, whose ``new motto is, `In Productivity We
Trust,''' said David Orr, chief economist at First Union Corp. in Charlotte.
Today's report also showed a pickup in inventory building, which added almost a percentage
point to the growth figure. Business inventories rose $60.3 billion at an annual rate in the second
quarter compared with the $36.6 billion increase in the first quarter. That is still down from the
$80.9 billion in the final quarter of 1999.
Should consumer spending continue to slow and result in further increases in inventories, that
may suggest ``slower production growth ahead,'' said Peter Kretzmer, an economist at Banc of
America Securities in New York.
bloomberg.com |
