Why You Shouldn't Invest in New Machinery

The flow of future profit is more valuable than the up front cost. Technological advances can make capital goods more efficient, and that will make them more attractive as an investment. Investment businesses also look at expectations. If business are confident that the economy's going to be strong in coming years, they'll invest. But if they see a recession on the horizon and predict that people will be buying less, well, it makes less sense for them to investin new machinery.