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Business Spending Won't Be Back Anytime Soon

David Payne, Staff Economist, The Kiplinger Letter

Capital spending is likely in for a prolonged slump, both because of the current global recession, and because the efforts to contain the coronavirus will take time. Spending is not expected to pick up again until progress is made against the virus, because much of it is tied to business expansion plans, which are now largely on hold. Also, trade volumes are likely to drop because of declining demand for many goods. Expect business spending to fall between 10% and 20% this year.

Another drag on business spending is that it looks to be late in the year before Boeing will be able to get its grounded 737 Max aircraft certified as safe to return to service. Even when approval is given, the Federal Aviation Administration is requiring that each Max aircraft go through its own inspection process rather than Boeing's. That is likely to delay the full return of the fleet. Southwest Airlines has taken 737 Max's out of its schedule through October 30.

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