Firms are rediscovering their love for capex. Good

AS THE RICHSPRDAT&TGDPRD world reopens, the contours of the post-pandemic economy are becoming clear. The latest trend is a . Forecasters reckon that overall real investment worldwide will soon be a fifth higher than it was before the pandemic. America’s business investment is rising at an annual rate of 15%. By 2022 companies in the & 500 are forecast to be spending over a tenth more on factories, technology, & and the like. Barely a day goes by without a large firm boasting about how much it plans to splurge. says it will throw $24bn a year at its networks. Sony is piling $18bn into an expansion push. Semiconductor firms are engaged in one of the biggest capital-spending (or capex) sprees in history.That is both a sharp change and an enormously significant one. Sharp, because before covid-19 managers embraced capex austerity. America’s business investment had stagnated relative to for several decades. Britain’s was 15% lower than in the late 1990s. Even as business profits soared, firms devoted a smaller share of their cashflows to capex and &, and more to share buybacks and dividends. Significant, because investment in new technologies and business practices is the secret sauce behind higher living standards. Weak capital spending contributed to the rich world’s sluggish productivity and growth in the 2010s, and to the gnawing sense that capitalism was misfiring.