These improvements seem to have been the result both of organizational changes in business operations and of innovations in the use of existing technologies, perhaps the result of firms applying more effectively the new technologies they had acquired at a rapid pace in the late 1990s. In 2003, the recovery took hold: The pace of consumer expenditures stepped up, and housing activity boomed.
These developments were supported by a pickup in personal income growth as job losses abated and hourly compensation moved up, as well as by rising stock market and housing wealth. In addition, the caution and uncertainty that had weighed on businesses began to dissipate, and investment turned up in the spring.