Firms in the past year have continued to invest in equipment and technology to improve productivity. And with good reason -- the cost of capital is below the cost of labor.
Firms are still pretty cautious, given the experience of the past couple of years. But if firms are going to maintain market share, they will have to be competitive in terms of the goods they offer.
The good news is that this is going to go directly to the corporate bottom line. That's a real plus for profits, which means a real plus for corporate spending and the recovery going forward.