AS LOCKDOWNS LIFT across the rich world, people are going out and spending. Australia’s restaurants have been rammed for months. America’s shopping malls are filled with people splurging stimulus cheques. Cinemas in Britain, which were allowed to reopen in mid-May, are packed once again. Yet behind the scenes another, potentially more significant, spending bonanza is just beginning.
To understand why analysts are so upbeat, consider the firms included in the S&P 500, America’s main stockmarket index. Together they account for about one dollar in seven of total rich-world corporate capital formation. In a recent report Bank of America analyses these companies’ earning calls since 2006, and concludes that executives are at their most bullish about capex.
Tech firms are not the only enthusiastic spenders. Firms in the S&P 500 that focus on discretionary consumer spending boosted capex by 36% year on year in the first quarter. Companies such as Target and Walmart, two retailers, are trying to keep up with the online giants that are eating their lunch. Marks & Spencer, an august British retailer, recently announced that it had launched 46 new websites in overseas markets from Iceland to Uzbekistan.
A shifting of the complex system of interconnected gears that is the world economy. One of my favorite Economist covers depicted the countries of the world connected in a vast gear system, the one country's 'gear' turning as it meshed with other countries as the others turned.
wow
Jum
“Stupid is as stupid does...” —Forrest Gump