One of the themes being promoted heavily in my business right now is infrastructure. The idea is simple: fiscal stimulus will come from increased spending on bridges, roads, and other types of infrastructure. Such investments are needed as it has been decades since there was a concerted national effort in this area and the economic stimulus will help fight the recession.
My clients certainly understand the idea and many have called me to ask about investments in this area. I remain cautious for a variety of reasons. Recent news that continues to fuel that caution:
- Financial Times: Steel output set for historic drop
- Bloomberg: Caterpillar cutting pay, hiring freeze
- Krugman: Fifty Herbert Hoovers, where he reports on states cutting back on spending, including infrastructure
Infrastructure companies may rebound in the future, but right now might be premature.