However, the economy has been  2  BIS Review 34/2006  expanding at an above-trend pace for about two years now, and the durability of the recovery should no longer be an issue. Indeed, most surveys of business confidence and capital spending plans have reached, and in some cases exceeded, the levels of the late 1990s.
Still another possibility is that conditions created by corporate governance scandals and the regulatory response to those events led firms to hold back on capital spending. The scandals and the market's reaction were said to have contributed to a more conservative attitude toward risk taking.