‘Trade worries not a drag on business investment’

Bloomberg

Goldman Sachs economists are skeptical that trade policy uncertainty is a major drag on business investment at the moment. Instead, they’re pointing to other economic indicators, which they say are still okay.
“The link between economic policy uncertainty and capex weakens sharply when taking into account financial conditions and company investment spending expectations, which both still signal a decent outlook,” Daan Struyven and Blake Taylor wrote in a note.
That’s “particularly relevant” right now, they said, as financial conditions are still “quite easy,” and capital expenditure expectations are positive. For the latter, they cite surveys conducted by the New York Fed, Philadelphia Fed, Richmond Fed, Dallas Fed and National Federation of Independent Business.
Goldman’s equity analysts also regard the recent trade war escalation as having little effect on capital expenditures, the economists said, citing a survey of 15 of the firm’s sector analysts. Only one reported their sector’s capital expenditure outlook had worsened because of tariffs, trade tensions or trade policy uncertainty, and no one reported hiring was hurt. Instead, they were worried about how trade policy might affect input costs, sales and profits.