NVI Technical College Information

Economic Feasibility

Financing investment is becoming a bit pricier as long-term interest

Investment in intellectual property (which consists primarily of

rates rise. However, many nonfinancial businesses are sitting on a

software and R&D) remained strong during and after the pandemic.

pile of cash. In our baseline forecast, the AAA corporate bond rate

That ’ s mostly because of investment in software, and it likely reflects

rises to just under 6% and stays there through the end of the

in the investments needed for teleworking. We expect this category

forecast horizon.

to remain strong over the next few years as businesses continue to

require software to accompany their investments in information

Although that may appear high, historically it is not that high. And

processing equipment.

A

continuing innovation in areas like artificial intelligence will help to

raise the demand for capital. On top of that, the need for

Future investment is likely to gradually switch in response to

investments in climate remediation may be quite costly.

incentives to invest in climate change remediation. Such investment

may not appear as profitable as past investment. Current methods

The International Monetary Fund mentions estimates of US$3-US$6

of measuring the economy, and corporate profits, don ’ t correctly

trillion of spending per year required through 2050.11 US business

measure the cost of climate change, or the benefits from reducing

are likely to find plenty of uses for capital, even at interest rates that

greenhouse gas emissions.

remain elevated above the prepandemic level.

US government policy is now pointing companies toward more

Our forecast has nonresidential investment spending growing faster

investment in climate remediation, and an increasing share of

than GDP through the forecast horizon.

business investment spending is likely to be dedicated to this goal.

Source: Deloitte

30