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The US economy’s poor growth reading took nearly everyone by surprise, and experts say weak business investment is to blame.
The economy grew by a mere 1.2% in Q2, half what economists expected, and business spending has fallen for three straight quarters, according to the Commerce Department. So what are firms doing with their cash?
Even in today’s world of super-low rates, most companies still opt to pay dividends and buy back their stock rather than invest in the future, the Wall Street Journal reports. That lack of investment is hurting the economy—the current 2.1% average annual growth rate is the weakest in the post-war WWII era. [WSJ]
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