Evidence of a turn in the business cycle has been met with almost bewildered disbelief by many American executives. The evidence has been rolling in: profits are rising strongly; investment by non-farm, non-financial corporations has expanded briskly for two quarters in a row; and corporate spending on computers and software is growing as rapidly as it did at the peak of the high-tech boom. Multi-billion-dollar mergers are back. General Electric is paying ￡5.7 billion ($9.5 billion) for Amersham, a British life-sciences firm; and Bank of America is purchasing FleetBoston, a rival American bank, for $47 billion. Both deals are aimed at boosting future growth. In addition, an initial public offering (IPO) planned next year for Google, a search-engine firm, could turn into the biggest dotcom flotation ever. Even payrolls have begun to expand again: the economy added 126,000 jobs in October, the sharpest growth in nine months. Yet many American businessmen, who just a few years ago were breezily predicting an almost eternal growth in profits, still seem strangely unable to rouse themselves from the torpor of recession. Last year, Jack Welch, the former boss of General Electric, warned of too much "hunkering down" in the boardroom, and there is evidence that the hunkering continues. On November 5th, John Chambers, the once-exuberant head of Cisco, a high-tech giant that makes switches to direct traffic around the internet, reported a 76% jump in his firm's profits. But, he said, this inspired in him only an "increasing but very cautious business optimism". Half his friends at the head of other companies tell him that things are looking better, he said. The others are not so sure.
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