To: bond_bubble who wrote (68951 ) 8/28/2006 2:27:43 AM From: CalculatedRisk Respond to of 110194 Business Spending May Languish, Raising Risk of U.S. Recession By Matthew Benjaminbloomberg.com Aug. 28 (Bloomberg) -- Like the title character of ``Waiting for Godot,'' the U.S. business spending spree many economists have been expecting just might not show up. Forecasts of a moderate slowdown for the U.S. economy this year assume that businesses will accelerate their spending on equipment, helping compensate for any weakening in consumer demand. Now, some are questioning that scenario. If the business investment binge is a no-show, they say, a contraction in the economy becomes more likely. ``Most of the people forecasting a soft landing are counting on a boost from capital expenditures,'' says Liz Ann Sonders, chief investment strategist at Charles Schwab & Co. in New York. ``I would be careful about that.'' She puts the odds of a recession at more than 50-50, ``and it could happen relatively quickly.'' Business investment in new equipment and software fell in the second quarter for the first time in more than three years, according to government figures. Along with slower consumer spending, that helped hold U.S. economic growth during the period to an annual rate of 2.5 percent, less than half the pace of the prior three months, the Commerce Department reported on July 28. A revised report this week may show second-quarter growth was 3 percent, according to the median forecast in a Bloomberg survey. Many economists say U.S. executives simply can't ignore the slowdown in spending by American consumers, who account for two- thirds of the U.S. economy. Personal spending in the U.S. rose just 0.4 percent in June, the smallest gain this year, while the University of Michigan's index of consumer confidence dropped in August to its lowest level since October. <MORE IN ARTICLE>