True, firms have distinguished themselves in at least one way: The increases in productivity we have seen in the nonfarm business sector over the past two years have been truly remarkable, particularly in light of the fact that productivity growth is typically weak during cyclical declines. Clearly, managers have dedicated themselves to producing more with less and to raising profits by cutting costs.
In another, critical sense, however, the business sector has not yet played its normal role in the recovery. Atypically for the post-World War II period, the current recession began as a slowdown in the business sector, particularly in capital investment, rather than as a retrenchment in household spending.