Long Term Perspective
Cash flow is to business investment what income is to consumption expenditures. For a long time - between 1996 and 1999 - business fixed investment grew more rapidly than cash flow. This imbalance can't continue forever. In fact, cash flow improved in 1999 and part of 2000 so that the growth of these two series were in alignment. At the end of 2000, cash flow dropped more than business fixed investment once again. It is likely that this is now signaling weakness in coming months for business fixed investment.

Short Term Perspective
Cash flow growth was zero or negative in the past four quarters - causing a negative trend for business fixed investment as well. When cash flow heads back up, so will capital spending.

Real GDP vs. Final Sales   •   Real Consumer Spending vs. Real Income   •   Debt Burden vs. Savings Rate

Business Fixed Investment vs. Net Cash Flow   •   New Orders   •   Housing Starts vs. Mortgage Rates

Merchandise Exports vs. Trade Weighted Dollar   •   Merchandise Imports vs. Trade Weighted Dollar