One reason why Fed stimulus may be less effective

From Craig Torres and Ilan Kolet:

“We are investing a whole lot more in the software we are using so we can use less and less employees to do the exact same work,” said Nobis, president of JK Creative Printers & Mailing, of Quincy, Illinois, which produces items from business cards to catalogues.

Nobis’s strategy is being replicated at companies around the U.S., where investment in software is up 19 percent since the 2007 business-cycle peak, while spending on hard assets has slumped. Executives are taking less risk on physical assets such as computer hardware, machinery or warehouses, and using software to increase efficiency or reach customers on the Internet.

That shift has implications for the Federal Reserve. It suggests business spending may be less responsive to interest-rate policies, such as quantitative easing, aimed at encouraging investment in long-lived assets like structures, housing and equipment. Software purchases are typically financed out of cash on a month-to-month subscription basis, making the cost of borrowing less likely to influence the decision.

The piece has other points of interest.