Weekly Economic Update: February 12 - February 16, 2018

February 09, 2018

CHART OF THE WEEK

Business Investment Surges in 2017

Private-Sector Investment

One of the key drivers behind 2017’s improved economic growth was business investment, notably in equipment, as the chart shows. Between 2009 and 2016, the amount of capital workers had to work with stagnated. This hindered productivity growth and, consequently, wage growth. This pickup in investment should help to reconstitute productivity and wage growth. Expectations of less onerous, more efficient regulation and taxation (as outlined in policy frameworks), followed by actual reform and improvement, likely helped drive the upswing in investment. In particular, the focus on immediate expensing of capital investments by Congress throughout the tax reform process was seen as an encouraging sign by the private sector. Now, this policy is a centerpiece of the Tax Cuts and Jobs Act.

LAST WEEK

News & Commentary Weekly Highlights

Wall Street Journal: It Takes Chutzpah to Call This the ‘Obama Boom’

CNBC: Fed won't overreact to good economic news, Williams says

Wall Street Journal: Challenges on Inflation Policy, Tax Cut Loom as Powell Era Begins at Fed

Bloomberg: The Real Mystery About Low Inflation

Top Economic Indicator Highlights

Job Openings and Labor Turnover Summary (JOLTS) (December 2017)

Category (seasonally adjusted levels)	Dec	Nov	Oct
Job Openings (thousands)	5,811	5,978	5,925
Hires (thousands)	5,488	5,493	5,592
Separations (thousands)	5,238	5,212	5,251

Noteworthy: There were 5.5 million hires and 5.8 million openings in December. Until late 2014, the number of hires had always exceeded the number of job openings. JEC held a hearing in July last year on the unusually large number of job vacancies.