Moreover, spreads on corporate bonds across a wide range of credit qualities have been moving up, especially for riskier firms, and an increasing number of banks report that they are tightening lending standards for business loans. All told, real spending on equipment and software seems likely to be subdued in the near term.
It is anticipated that investment spending should receive some help in the second half of this year from the accelerated depreciation provisions in the fiscal stimulus bill; however, based on experience with a similar tax provision in 2002 and 2003, the magnitude and timing of these effects is very uncertain.