NVI Technical College Information

Economic Feasibility

Recent legislation — the CHIPS and Science Act and the Inflation

Business investment

Reduction Act — provide significant incentives for increasing

Businesses have ramped up investment since the initial impact of

manufacturing capacity in the United States. And those incentives

the pandemic, but they have been selective about what they are

do seem to be creating demand for investment in manufacturing.

investing in.

Investment in equipment has been slowing. After rising over 10% in

Investment in nonresidental structures fell more than 20% between

2021 and 4.3% in 2022, equipment investment has been flat during

the pandemic and the third quarter of 2022. Prospects in many

A

the first half of 2023. Since the pandemic, equipment investment has

nonresidential building sectors remain grim. The business case for

been dominated by transportation equipment and information

office buildings and retail space has diminished, with online

technology (IT) equipment. Remote work makes IT equipment (and

shopping and the shift toward working at home. Current talk of

software) a substitute for buildings, and so the counterpart to weak

converting office buildings to residential spaces suggests that real

investment in commercial structures is a lot of investment in IT. That

estate experts don ’ t see a lot of room for growth in office demand.

need was particularly strong as companies moved to more virtual

work over the past few years. But now that the initial investments

However, the past few quarters have seen some growth in

have been made, we are seeing a slowdown in investment in

nonresidential construction. Mining structures investment has

information processing equipment. Some of this weakness has been

picked up in response to higher oil prices. The surprise here is that

offset by continued fast growth in investment in transportation

mining didn ’ t grow earlier and faster. But the more surprising

equipment.

contributor to growth is manufacturing structures.

Source: Deloitte

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