"I don't understand how we'll get a real recovery without capital expenditures increasing. And I don't understand how you get capital expenditures to increase with capacity utilization at 70%. What am I missing?"
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SantaCruz...
You are missing nothing except you need to carry it just a bit further. As you noted, capital expenditures will not rise much until capacity utilization goes significantly higher, but capacity utilization will not improve until consumer spending has a meaningful increase. Consumer spending is the key to any recovery and with the consumer at record debt levels, unemployment on the rise, and the re-fi boom over, consumer spending is not going to increase much, if at all.
Personally, I expect consumer spending to decrease from here, taking us into a new leg of recession.
mlsoft
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