Increases in business fixed investment, particularly equipment and software, are unlikely to return to the extraordinary levels experienced in the period immediately prior to the recent slowdown. However, a period of inadequate corporate investment that results in "capital shallowing" rather than capital deepening would almost surely hurt our productivity performance. I do not attach a high probability to this latter scenario.
Although some industries have suffered severe losses and have sharply curtailed their capital expenditures, other sectors have posted growth in earnings and have continued to invest. Thus, in the aggregate, the underlying picture of both corporate profits and capital spending is not as bleak as the experiences of some industries might suggest.