海涅的诗代表作:Hoisington Quarterly Review and Outlook (3)

Capital Spending Cutback

Adding to the recessionary woes of 2012 will be a retrenchment in capital spending. Accelerated depreciation of 100% was permitted for all capital expenditures provided the items purchased were installed by 12/31/11. This year the accelerated depreciation drops to 50%, resulting in a dramatic increase in the after-tax cost of such outlays. If the past is any guide to the present, businesses have worked this one-year tax gimmick to their advantage, just as they did previously. Firms looked into 2012, and in some cases even further, and pulled those outlays into 2011. This creates an artificial boom/ bust cycle which will be evident in 2012. However, the fourth quarter is showing strength; thus, our expectation of a recession beginning in the fourth quarter was premature.

Significantly, as 2011 was ending, the tax benefit was clearly wearing off. Non-defense capital goods orders (ex aircraft), which is the best leading indicator of capital spending, fell by 1.2% in November, after a 0.9% decline in October. For the three months ending November, shipments in the same category fell by 2.2%. Consequently, a sharp recovery in December would still leave real private investment in equipment and software unchanged for the quarter, the worst showing since the end of the 2009 recession and a dramatic reversal from a 16.2% surge in the third quarter. The 100% accelerated depreciation pertained to all sorts of capital goods from passenger cars and light and heavy trucks, on the low tech side, to sophisticated computers and related equipment, on the high tech side. Therefore, the flat fourth quarter expenditure level should give way to a sharp decline in the first half of 2012. This weakness would have occurred regardless of the other factors influencing capital spending, but with exports faltering and corporate profit margins being squeezed, the fall-off in business investment is likely to be sharper than the normal expiration of such a transitory tax benefit. Therefore, the 2012 recession will be caused by the combination of retreating capital spending, lower consumer spending growth, declining exports, and a spending drag from all levels of government.

One Continuous Slump

The actualization of a recession in 2012 will be especially difficult for the average American in that we have not really recovered from the previous recession ending in 2009. This obviously is not a typical business cycle; rather, we may be in the midst of what Harvard historian Niall Ferguson titled a “slight depression.” The reason for this analysis is that real personal income less transfer payments, one of the four coincident indicators the NBER uses to determine recessions, has recovered off its recessionary low in 2009, but is still about a half trillion dollars below where it was in 2008. Industrial production is still off 5% from its peak and no higher than in 2005. Full time employment is at the same level as in May 2000, despite a 28 million person increase in population and a 11.4 million rise in the labor force. Real median income stood at $51,800 in 2007, but for the first time ever has declined in this recovery and now stands at an estimated $49,400, a 6.4% drop from the previous peak. These statistics painfully point out the adjustment process in an overleveraged economy.

Treasury Market

The long end of the Treasury market witnessed a decline in yields from 4.34% at the beginning of 2011 to 2.89% at the end of the year. To most, this 35% return was a surprise as there was near unanimity of opinion that rates would rise in connection with the higher real economic growth rate that was expected for 2011. Similarly, faster growth seems to be embedded in most rate expectations for 2012, and concomitantly expectations are for interest rates to rise. If recessionary conditions appear in 2012, as we expect, then even lower long-term interest rates will be recorded.

Van R. Hoisington Lacy H. Hunt, Ph.D.

Source: JohnMauldin.com (http://s.tt/15gfc)