Waiting

We aren't professional economic prognosticators.  But there is correlation between macro trends and deal market conditions, so we try to follow economic news.

We would love to see robust economic growth in the US, but it looks like the economy will stay tepid for a while.  One of our favorite economic blogs, Calculated Risk, highlights the key challenge:

"I could borrow $2 billion tomorrow for 3 1/2 percent. But what am I going to do with it?"

David Speer, CEO of Illinois Tool Works which has 60,000 employees worldwide in more than 800 business units and $14 billion in sales.

The above quote is from an article by Neil Irwin in the WaPo: With consumers slow to spend, businesses are slow to hire

There is no reason to invest when there is excess capacity in most industries (and excess supply in housing). This excess capacity or lack of demand - and therefore lack of new investment - is a key reason why the recovery is sluggish.

The consumer faces big challenges:  on the income statement, high unemployment and slow wage growth; on the balance sheet, stock market and real estate prices well off previous highs.  With consumer demand weak and lots of excess capacity, many businesses aren't making  investments to create the incremental GDP needed to drive economic growth.  These conditions don’t necessarily forecast a recession and won't last forever, but they do make sub par economic growth likely for some time.  We will wait it out.