Capital-outlay plans cut

American businesses expect to spend even less on modernization and expansion this year than they did last year, cutting capital spending by 5.3 percent after inflation, the Commerce Department reports.

At this time last year, businesses had anticipated cutting plant and equipment spending during 1982 only by 0.5 percent, a figure that turned out to be far too optimistic. The department said that for all of 1982 capital spending declined 4.8 percent.

For 1983, the survey indicates a 5.5 percent decline in spending by manufacturers and a 5.1 percent drop by nonmanufacturers.

The most severe cutback is planned for the industries producing goods for immediate consumption, from food to cosmetics, where spending is expected to decline 7.6 percent, after adjustment for inflation. Spending in the durable-goods industries, like autos and machinery, is expected to decline 3.5 percent, the department said.

The inflation rate used in the adjustment for price changes anticipates a 4 percent increase for capital goods this year, down from last year's 4.8 percent.

Administration officials expect capital spending to improve in the second half of 1983, assuming business plans will be revised upward when the economy begins to accelerate. Economists foresee a modest rebound in the economy this year. If the economy doesn't recover, the capital-spending plans of American business could be cut further quarter by quarter.

You've read  of  free articles. Subscribe to continue.
QR Code to Capital-outlay plans cut
Read this article in
QR Code to Subscription page
Start your subscription today