Caterpillar's CEO, Jim Umpleby has told investors that there will be no new plants constructed even though orders have tripled for the company. From this Reuters article we see that:

Years of watching Caterpillar and other big manufacturers cut inventories, close plants and axe workers in the last downturn has embedded caution in Kirsh’s ambition to expand after the surge in orders, reflecting a more fundamental shift in how many industrial businesses view expansions, according to interviews with Caterpillar executives, more than a half-dozen Caterpillar suppliers and U.S. economic data.
“I just wasn’t sure it was real,” said Kirsh, speaking from a windowless office at the front of Kirsh Foundry Inc., in Beaver Dam, Wisconsin, which makes metal parts for Caterpillar and other customers.
Even with a surplus in demand for its product, Caterpillar CEO Jim Umpleby told investors last month the company will not invest in factory capacity. Instead, it plans to spend more on new technologies, expanding its parts business and selling more rental and used equipment.

The question is whether this example of industrial sector refusal to increase investment and capacity is a sign of the end of the business cycle. Certainly, from a historical perspective, it would be a big red flag. I wrote an article not so long ago about Michal Kalecki, the economist, who said that lack of investment is a sure sign that the business cycle is on its last legs.

I said this about Kalecki:

Kalecki believed that investment finances itself, meaning growth resulting from investment increases profits and savings. Kalecki believed that you could see where we are in the business cycle by the level of investment made. Investment in some sectors is strong, but costs are elevated. Manufacturing investment is clearly lagging, per Marc Chandler.
Manufacturing investment decline coupled with a commercial real estate bubble that could constrain retail investment are a double dose of potentially bad news. It could be that the business cycle's days are numbered.

https://tradingeconomics.com/united-states/manufacturing-production

The economy is more diverse now, than when Kalecki wrote. Industrial production is not the only business of America. Energy and technology are expanding and we have anecdotal evidence of that.

But Gregory Tassey, senior economist at the National Institute of Standards and Technology, has written a couple of fascinating articles regarding growth in technology. In his article, Make America Great Again, Tassey says:

But today, technology is increasingly developed elsewhere in the world, creating severe pressure on domestic industries and supporting infrastructures. Domestic fixed private investment (FPI) in physical assets such as machinery, land, buildings, vehicles, and technology is too low, and survey after survey of industry managers shows that the supply of skilled labor is inadequate. Government research institutions and R&D budgets are still oriented largely toward a set of social objectives such as defense and public health that only indirectly leverage economic growth. The end result has been sluggish output and income growth.

America is supposed to be a leader in technology. But the truth is, America has more income inequality than any nation on the face of the earth. Trump's tax plan, now passed, makes this inequality even worse. If America cannot finance technology, coupled with the inability to finance new factories for industrial production, then there the economy will lose steam and we could have another major setback.

According to Tassey, the Republicans are not so much interested in increasing national income as they are in redistributing it upwardly. Marc Chandler speaks to the small amount of American exports, one percent of all companies are doing the exporting. Well, Americans forget that 95 percent of all consumers live outside the United States. That is no doubt why Donald Trump blinked with regard to Chinese demands. They have the customers.

Many Republicans and Democrats want to limit China and Asia even more than Trump. But engaging with them, and trying to open their markets is essential to future US prosperity. As Tassey said:

The right-wing populist groups and the more liberal wing of the Democratic Party, led by Senator Bernie Sanders of Vermont, an Independent who normally caucuses with the Democrats, both favor protectionist philosophies, as evidenced by their opposition to the Trans-Pacific Partnership. Dumping it is basically ceding the huge Asian market to China, but President Trump agreed with these groups and terminated the agreement.

Trump wanted to be included in that partnership after the fact. He realizes that as markets close, American dominance fades. It is beyond the scope of this article to determine if the Trans-Pacific Partnership was a good deal for America. But as Tassey clearly points out, no deal is a bad deal for American technology.

Tassey is clear, the US became great by out investing everyone else in the last century. Kalecki says lack of investment leads to weakness in the economy. That lack of investment is why our economy has never gotten back on track after the Great Recession. Ours is an economy driven by speculation and by a temporary utilization of capacity, both in tech and industry.

Innovation is put on the back burner. Only 3 percent of growth in America between 2010 and 2014 came from rural America. That is a very low number. The tax bill did include provisions to encourage growth in rural America. But one wonders if it will work if industrial companies like Caterpillar refuse to build factories in their own backyards. And it is unlikely that technology would ever relocate to rural areas because of a lack of skilled workers there.

When traveling through Utah on vacation,  I was struck by the amount of small towns tied to energy development. Industry and technology were lacking. All that kept these little towns going were agriculture and the better paying energy presence. Energy jobs may be fleeting as it is a commodity subject to price fluctuations due to supply and demand worldwide. Clearly industrial production and technology production can be more stable than reliance on energy.

So, from a political perspective, the Democrats want to redistribute growth downward while Republicans want to redistribute growth upward. Neither party is committed to growing the American economy. Donald Trump clearly is less concerned with technology than he is with industrial production. He wants the good old days. But even industrial production is limited by capacity, and there is little being done on either front to change all of that.

While the Democrats' plans are incomplete, Republicans are more interested in setting the table for speculators and cronies and the Wall Street casino, rather than for real business. They are more trapped by the New Normal than they would like to admit:

The Democrats at least partially recognize the strong public-private good character and the complexity of the early phases of R&D, as evidenced by President Obama’s support for innovation clusters. They also have introduced legislation to provide infrastructure support for small businesses and entrepreneurs. Unfortunately, these efforts are largely ad hoc and incomplete. 

Tassey also says:

The Republicans are further off course, implicitly claiming that government should support development of only those technologies useful to a government mission such as defense. They see no need to nurture the development of technologies that will contribute directly to economic growth.

Republicans deride public private partnerships. The Hoover Dam is a direct result of such a partnership. That was when America was great. Even Trump's infrastructure plans are derailed in the congress as were Obama's plans.

America should spend on high tech infrastructure, not just roads. As Tassey says, there is a structural problem with the American economy. Kalecki, were he still with us, would likely say that problem leads to a destruction of the business cycle, as investment when demand is present and increasing is still being avoided.

Or, as some have said about the economy since the Great Recession, there never was a real recovery in the first place. The gulf between rich and poor has only increased. Clearly research and development must be encouraged by, and helped by government. It worked in the past, when we were great. It can work again. Through innovation, labor must reap a greater portion of GDP or the business cycle will drag down the American economy.

Donald Trump may not be the only unstable populist to come out of this long season of discontent.