Still, investment over the past few years is showing no signs of returning to the path that we would have expected from historical relationships through 1999. Business financial statements also reflect evidence of restrained business spending behavior. Normally, businesses are heavy net users of savings generated by the rest of the economy.
The financing gap--the level of capital spending over the level of internal funds--is a measure of that reliance. But it was close to zero in 2002 and 2003 and remained unusually low last year (after adjustment for tax-induced flows of repatriated foreign earnings), which suggests that businesses  1  Stacey Tevlin and Charles S. Struckmeyer, of the Board's staff, contributed to these remarks.