The Michigan Daily - Friday, September 11, 1992- Page 5
Businesses cut investment spending
WASHINGTON (AP) - U.S.
businesses cut back on already mod-
est plans for investment spending
this year, the government said yes-
terday in a report reflecting renewed
pessimism about the economy's
prospects.
Businesses surveyed during July
and August told the Commerce
Department they would spend $551
*billion on new plants and equipment
this year, a 4.3 percent increase from
1991.
In the previous survey, during
April and May, businesses had
planned a 4.7 percent increase.
Before the year began, they had an-
ticipated a 5.4 percent rise.
Meanwhile, a separate report
from the Labor Department showed
new claims for unemployment bene-
fits rose slightly in late August for
the second consecutive week. The
increase of 8,000 claims to 394,000
during the week ending Aug. 29 re-
flected a stagnant job market, ana-
lysts said.
A survey released earlier this
week by the U.S. Chamber of
Commerce showed that business ex-
ecutives' confidence in the economy
was at its lowest point in eight
'The fact is that manufacturers and
businesses generally are still scared. They
don't see a big increase in demand coming.'
- David Wyss
economist
they are not anxious to hire and they
are not anxious to do anything
permanent and big investment is
very permanent."
The increase in investment
spending this year, if realized, would
follow a 0.8 percent decline in 1991,
only the fourth drop in the past 33
years. Spending had risen a moder-
ate 5 percent in 1990 after shooting
up 11.4 percent in 1989 and 10.6
percent in 1988.
Economist Stephen Roach of
Morgan Stanley & Co. in New York
said he had expected an even greater
reduction in investment plans, given
the economy's recent sluggishness.
"I take heart from the fact that
businesses in 1992 are still planning
a 4.3 percent increase," Roach said.
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Business owners, who have seen
their hopes for stronger economic
growth dashed several times over the
past year and a half, will remain cau-
tious about new hiring and major in-
vestment until they see a sustained
improvement in their sales,
economists said.
months.
"The fact is that manufacturers
and businesses generally are still
scared," said economist David Wyss
of DRI-McGraw Hill in Lexington,
Mass. "They don't see a big increase
in demand coming. So, as a result,
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