The Trump administration’s trade conflicts with other companies may be keeping businesses from investing as they try to wait out the storm. Durable goods orders fell by more than expected in October, the Department of Commerce reported Wednesday.
“October orders for business equipment suggest the trade wars or stock market turmoil is dampening the confidence of companies, and business investment will not be a significant driver of GDP growth in the fourth quarter,” said Chris Rupkey, chief financial economist for MUFG, global financial group, on Wednesday. “If the president is thinking of cutting a deal with China at G20 in Buenos Aires, now would be the time.”
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Total durable goods orders plunged 4.4 percent in October, according to Wednesday’s report, more than the roughly 2.5 percent expected. The decline partly reflected a pullback in spending on defense aircraft, though, which shouldn’t signal much about investment in the future. Nevertheless, analysts saw core business capital expenditures as flat, despite the incentives for business to invest contained in last year’s tax cuts.
President Trump is set to to talk with Chinese leader Xi Jinping during the G-20 summit in Argentina next week. Much is apparently riding on the meeting. The administration has previously indicated that it may go forward with additional tariffs on $257 billion in Chinese goods, on top of the tariffs on $250 billion worth of goods it has already instituted, if there is no progress at the meeting. Last week Trump said the tariffs may not be necessary though.
