Capital Equipment Spending Up Bump

It looks like the change in the IRS tax code eliminating depreciation is having a positive effect on capital equipment spending such as machining centers. Rather than depreciating the cost of capital equipment, starting in 2018 job shop owners and companies in general can expense 100% of the purchase in the tax year the equipment is installed. Conversations with machinery sales people are confirming that this is the strongest Q4 in years and that accountants are telling their clients you can either pay taxes on your profits or buy another milling or injection molding machine instead. So look for capital equipment spending to surprise GDP on the upside.