Third, tax provisions passed in 2001 and 2003 lower the effective cost of investing in new equipment. Finally, as best as we can tell, expectations and attitudes in the business community - as reflected in surveys, information from business contacts, analysts' expectations of long-term earnings growth, and the like - have brightened somewhat.
When all these factors are taken together, it seems a reasonable bet that the revival in capital expenditures will continue and will strengthen sufficiently to support the optimistic growth forecasts that I discussed earlier. As the prospective investment revival is central to the optimistic growth forecast, however, it is also the locus of the most critical risks to the forecast.