But they are unlikely to return to the spending patterns of old, and we cannot expect outsized gains in consumer outlays to provide an extra push to the economic expansion. Last, business investment spending has been depressed by a weak and uncertain sales outlook, tight credit conditions, and significant unused capacity.
However, signs are growing that confidence is returning as the outlook for sales brightens and bond spreads narrow. Moreover, spending on equipment and software is likely getting a boost from replacement demand.