Even as economic recovery has given way to expansion, the primary measures of business spending and output are still struggling to dig out of the hole created by the recession. Relative to their respective pre-recession peaks, industrial production is still off more than 2 percent and durable goods orders are off 4.9 percent. Nondefense capital goods orders ex-aircraft, briefly eclipsed its record high in January, but this series has lost ground since then and is off one percent from both its pre-recession peak and its new cycle high. In this essay we identify some shifting fundamentals that underpin our somewhat less cautious view about the role business spending will play in supporting the economic expansion.
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Wells Fargo