Capital spending continues to be key to U.S. economic growth. Business investment in equipment accounted for over a third of the economy's 4.0 percent growth in 1994. Spending for information processing and related equipment accounted for almost two-thirds of the growth in capital spending by businesses. That means business spending for information processing equipment accounted for almost a quarter of gross domestic product (GDP) growth last year by itself. Adding credibility to developing spending trends, the U.S. Commerce Department recently completed its semiannual survey of investment plans, which indicates U.S. businesses don't intend to slow their spending. Businesses plan to invest close to 600 billion dollars this year for capital goods, nearly 7 percent increase over 1994 levels. Manufacturers have the most aggressive spending intentions. Currently, their plans call for a 20 percent increase over 1994 levels, with durable goods manufacturers planning a 28 percent increase. All told, manufacturers will account for almost 30 percent of capital spending by U.S. businesses this year. Strong growth in manufacturing employment and manufacturing capacity utilization levels in excess of 85 percent has convinced manufacturers that now is the time to make up for underinvestment during the past decade.
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