Business caution As I discussed earlier, regression analysis suggests that the robust growth in profits and the comparatively modest recovery in capital expenditures leaves a good part of the extraordinary cash buildup unexplained. But that analysis takes capital expenditures as given.
In doing so, it sidesteps some of the important questions with which economists and policymakers have wrestled: Why did business fixed investment contract so severely in the most recent recession? And, why wasn’t the rebound from the recession more vigorous, particularly in light of such high profitability?