And, in the second half, real fixed investment rose more than 10 percent at an annual rate, the fastest two-quarter rate of increase since early 2000. To be sure, a sizable portion of the recent strength in investment has been for high-tech equipment, and much of it probably reflects replacement of outdated machines rather than an expansion of existing production capacity.
However, spending on other types of equipment now seems to be picking up as well, and the caution that had previously restrained capital spending seems to be in the process of lifting. Against this backdrop, inflation has remained quite low despite some sizable increases in energy prices.