An improvement in corporate profits is producing a virtuous cycle that is spreading to domestic private demand through the corporate and household sectors. First, the corporate sector is maintaining its positive fixed investment stance.
Demand for U.S.-made capital goods from both domestic and foreign firms has supported manufacturing production throughout the recovery thus far. Both equipment and software outlays and exports increased solidly in the first quarter, and the data on new orders received by U.S. producers suggest that the trend continued in recent months.