In particular, business balance sheets are strong, and although profits have slowed, profit margins remain elevated. Interest rates and credit spreads are relatively low, and firms appear to have ample ability to raise funds at a reasonable cost.
The unwillingness of businesses to invest might be due to concerns about the prospects for long-term productivity growth and the expected rate of return on capital investment. Moreover, businesses may be anticipating a more pronounced deceleration in sales than would be consistent with the moderate expansion that I am expecting.