In addition, businesses should see some relief from the pressure on profit margins that had developed in recent months as energy prices rose sharply, and improvement on this front could be a positive development for capital spending. A modestly encouraging sign is provided by the backlog of orders for nondefense capital goods excluding aircraft, which has been moving up in recent months.
Households, too, are likely to welcome lower energy bills and a continuation of favorable conditions in mortgage and credit markets. As you know, core prices by many measures have increased very slowly over the last six months.