Source: Bloomberg

Earlier this year, American companies and consumers thought that interest rates would finally decline, so a large plan for buying equipment or houses was formulated.Now everything is put on hold, and most of the economic fields will slow down in the foreseeable future.

A cutting tool manufacturer in Michigan has postponed new equipment expenditures of up to $ 1 million (S $ 1.35 million) this year.A woodworking machinery manufacturer of Atlanta said that some customers are trying to extend the service life of the equipment.

The progress of inflation was stagnant earlier this year. Fed officials decided to maintain interest rates at a high point in 23 years, which forced enterprises to re -consider capital expenditure, inventory and recruitment investment.After a two -day policy meeting, it is expected that policy makers will keep loan costs unchanged again on Wednesday.

For enterprises, pain is reflected in data.The S & P Global Intelligence Company predicts that the capital investment of manufacturing this year will only increase by 3.9%, below 6.7%of the estimated 6.7%in January.According to data from the administrative office of the US court, as of the end of March, the number of bankruptcy applications for US companies increased by more than 40%, and personal bankruptcy applications increased by 15%.

A report released by the

Supply Management Association (ISM) on June 5 shows that most respondents in the service industry said that inflation and current interest rates have hindered the improvement of corporate conditions.

The Fed has maintained interest rates at high for a long time and has also undergone uncertain seeds around the world. At the same time, it further squeezed consumers with liabilities and postponed house purchase.

delayed equipment procurement

"In the case of high interest rates, you must take back the reins," said Patrick Curry, president of Fullerton Tool Co. in Michigan."We must postpone some measures and try to use existing equipment."

Fullerton, which has a history of 81 years, has two factories in Saginaw, Michigan, and has a factory in California to produce cutting tools for aerospace, automobiles and medical care.Curry said the company has postponed about $ 1 million of equipment upgrades, and customers no longer buy so many equipment.

ISM's economic prediction on May 15 shows that the company's leaders expect that capital expenditure this year will only increase by only 1%, below nearly 12%of the estimated estimated in December 2023.

According to the futures market data, investors are expected to cut interest rates by about 1.5 times this year, and believe that the possibility of first interest rate cuts in September is roughly 50%.

Leight Lyater, CEO of the Association of Equipment Leasing and Financial Association, said in a press release that if the Fed started to reduce interest rates at that time, enterprise and software investment should be rebounded in the second half of this year.

The equipment financing and lease manager Blair Chandler, a woodworking machinery manufacturer SCM North America, said that people still have demand for heavy saws and drilling machines for manufacturing cabinets and furniture.

CHANDLER said that although large customers are still buying, small customers are trying to extend the service life of the old equipment.