Capex Boom

Extracted Attributes

• Type

  Economic Concept

• Definition

  A significant surge in capital expenditures.

• Key Proponent

  Scott Bessent

• Primary Driver

  Development of AI infrastructure.

• Envisioned Outcome

  Widespread Productivity Boom.

• Policy towards China

  Above the line/below the line policy (separating strategic technologies from general commerce)

• Supporting Policy Tool

  Permitting Reform

• Associated Economic Plan

  Scott Bessent's 333 plan

• General Purpose of CapEx

  Investments in long-term assets (property, equipment, machinery) that generate revenue over multiple years, supporting growth and productivity.

• Associated Infrastructure

  AI factories built by Hyperscalers.

• Energy Strategy (Long-term)

  Renaissance in Nuclear Energy (Gen 4 Nuclear Reactors, Small Modular Reactors)

• Energy Strategy (Near-term)

  Reliance on cheap and abundant Natural Gas

• Historical Context (General)

  Often characterized by new disruptive technology requiring massive infrastructure buildout, such as the telecom and internet boom of the 1990s.

• International Trade Approach

  Transactional trade deals

Global saving glut

A global saving glut (also GSG, cash hoarding, dead cash, dead money, glut of excess intended saving, or shortfall of investment intentions) is a situation in which desired saving exceeds desired investment. By 2005 Ben Bernanke, chairman of the Federal Reserve, the central bank of the United States, expressed concern about the "significant increase in the global supply of saving" and its implications for monetary policies, particularly in the United States. Although Bernanke's analyses focused on events in 2003 to 2007 that led to the 2008 financial crisis, regarding GSG countries and the United States, excessive saving by the non-financial corporate sector (NFCS) is an ongoing phenomenon, affecting many countries. Bernanke's global saving glut (GSG) hypothesis argued that increased capital inflows to the United States from GSG countries were an important reason that U.S. longer-term interest rates from 2003 to 2007 were lower than expected. A 2007 Organisation for Economic Co-operation and Development (OECD) report noted that the "excess of gross saving over fixed investment (i.e. net lending) in the "aggregate OECD corporate sector" had been unusually large since 2002. In a 2006 International Monetary Fund report, it was observed that, "since the bursting of the equity market bubble in the early 2000s, companies in many industrial countries have moved from their traditional position of borrowing funds to finance their capital expenditures to running financial surpluses that they are now lending to other sectors of the economy". David Wessell in a Wall Street Journal article observed that, "[c]ompanies, which normally borrow other folks’ savings in order to invest, have turned thrifty. Even companies enjoying strong profits and cash flow are building cash hoards, reducing debt and buying back their own shares—instead of making investment bets." Although the hypothesis of excess cash holdings or cash hoarding has been used by the OECD, the International Monetary Fund and the media (Wall Street Journal, Forbes, Canadian Broadcasting Corporation), the concept itself has been disputed and criticized as conceptually flawed in articles and reports published by the Hoover Institute, the Max-Planck Institute and the CATO Institute among others. Ben Bernanke used the phrase "global savings glut" in 2005 linking it to the U.S. current account deficit. In their July 2012 report Standard & Poor's described the "fragile equilibrium that currently exists in the global corporate credit landscape". U.S. NFCS firms continued to hoard a "record amount of cash" with large profitable investment-grade companies and technology and health care industries (with significant amounts of cash overseas), holding most of the wealth. By January 2013, NFCS firms in Europe had over 1 trillion euros of cash on their balance sheets, a record high in nominal terms.

Web Search Results

• Booms and Busts: A Brief History of Capital Spending Cycles

  Fast-forward to the telecom and internet boom of the 1990s and a similar story plays out at a much faster pace. The telecom CapEx cycle really took off in the middle of the decade as a massive new source of demand (the internet) combined with new advances in fiber-optic technology and the passage of the Telecommunications Act of 1996 (which allowed for more competition and new entrants). [...] a better investment than Cisco in the first decades of the 2000s. We are focused on finding companies in healthcare, financial services and manufacturing that will be the primary beneficiaries of this CapEx cycle. [...] CapEx mega-cycles are generally characterized by the invention of a new, disruptive technology that requires the buildout of massive infrastructure. They tend to revolve around major productivity-enhancing innovations, such as new forms of communication, new energy sources or generation methods, or transportation. Cheap and easy credit can pump investment – so can government backing through direct funding or regulatory support. While government support and debt funding can help a new industry

• Financing the capex boom - Landfall Strategy Group

  I recently argued that a ‘great reindustrialisation’ process was likely across advanced economies, after a few decades of broadly declining capital investment. There are several reasons for substantially increased capex: industrial policy and global economic fragmentation; technology and the net zero transition; as well as an aging population. This will be positive for growth, including (hopefully) productivity growth. [...] Overall, there will be significant variation in the extent to which advanced economies participate in reindustrialisation. Capex will be located in jurisdictions with better political/institutional foundations; those that are able to attract capital from geopolitically-aligned partners; as well as those with economic policy settings that are supportive of attracting and mobilising capital. [...] There are several economic/policy factors that will shape the ability of economies to attract and mobilise the capital to finance increased productive investment: the size of the domestic market; the sectoral and firm mix; fiscal space and industrial policy; as well as national savings rates and capital market dynamism. Analysis of these factors indicates wide variation in the likely trajectory of capex across economies – and by extension, in national economic performance.

• CapEx Explained: What It Is & Why It's Essential for Growth - Excedr

  Capital expenditures, commonly known as CapEx, are essential investments in a business's long-term assets—such as property, equipment, and machinery—that generate revenue over multiple years. CapEx represents a significant portion of a business’s budget, focused on acquiring or improving assets that support growth and productivity. [...] Capital Expenditures (CapEx) refer to the funds a company allocates toward long-term assets or investments that support its growth and operations. CapEx is typically directed at acquiring or improving fixed assets like property, plant, and equipment (PP&E), which are essential for a company’s ongoing business activities. Sometimes referred to as a capital expense, CapEx involves investments expected to generate benefits over multiple years, supporting future growth rather than immediate [...] Capital expenditures, or CapEx, are crucial investments in long-term assets that drive a company’s growth, productivity, and competitive edge. By strategically allocating resources to essential assets like equipment, facilities, and technology, businesses can increase efficiency, scale operations, and build resilience. For life sciences companies, CapEx investments are especially vital in supporting research, laboratory infrastructure, and manufacturing capabilities—all necessary to stay

• A new capex supercycle: driving powerful and transformative growth

  We calculate that transformative macro-economic trends will drive global capex by an additional US$2.5 trillion per year in a base case scenario and US$5

• Capital Expenditure (CapEx): Definitions, Formulas, and Real-World ...

  Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment. CapEx is often used to undertake new projects or investments by a company. Making capital expenditures on fixed assets can include repairing a roof if the useful life of the roof is extended, purchasing a piece of equipment, or building a new factory. [...] CapEx can tell you how much a company invests in existing and new fixed assets to maintain or grow its business. It's any type of expense that a company capitalizes or shows on its balance sheet as an investment rather than on its income statement as an expenditure. Capitalizing an asset requires that the company spread the cost of the expenditure over the useful life of the asset. [...] CapEx is the investments that a company makes to grow or maintain its business operations. Capital expenditures are less predictable than operating expenses that recur consistently from year to year. A company that buys expensive new equipment would account for that investment as a capital expenditure. It would therefore depreciate the cost of the equipment throughout its useful life. ## Is CapEx Tax Deductible?