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More buybacks, less capex in 2016: Goldman

Capex to contract in the next three years

Corporate America likely will continue to focus the greater share of cash it shells out in 2016 on buying back stocks and issuing dividends, according to a Goldman Sachs analysis.

Of the $2.2 trillion S&P 500 firms are expected to spend next year, more than $1 trillion will go to buybacks and dividends alone, Goldman chief equity strategist David Kostin and others said in a report for clients.

By contrast, capital expenditures likely will get $650 billion, just a 1 percent increase over 2015 levels that have been steadily declining. In the third quarter, capex plunged 5.6 percent to $153 billion, subtracting nearly a full point off gross domestic product, which grew a meager 1.5 percent in the quarter, according to the Bureau of Economic Analysis.

Capex, or gross private domestic investment, plunged during the financial crisis and has been on a mostly measured move higher.