UBS: Non-tech capital spending in two-year recession

UBS reports that capital spending outside the technology sector has effectively been in recession for at least two years. The bank notes that private non-residential fixed investment has averaged 0.1% year-over-year over the last eight quarters, a figure significantly below the 3.2% long-run average. Residential investment has fared worse, averaging -2.0% year-over-year compared to a 2.2% long-run average over the same period.

In contrast, AI-related investment has grown 26% year-over-year during this timeframe. UBS argues that because broader investment is already weak, additional rate hikes may have limited ability to suppress further spending. The bank suggests that such measures may do little to contain inflation given the existing state of non-technology capital expenditure.