Cash flow is to business investment what income is to consumption expenditures. Business investment grew more rapidly than cash flow until 1998. The revival in cash flow represents a rebound in corporate earnings. GDP now incorporates computer software in business fixed investment, which has boosted both fixed investment and GDP growth over the past 10 years.

Short Term Perspective

Healthy cash flow in 1999 and 2000 spurred investment spending in recent years. Incidentally, third quarter investment spending was concentrated in structures, not equipment as in the past several quarters.

Real GDP vs. Final Sales   •   Real Consumer Spending vs. Real Income   •   Debt Burden vs. Savings Rate

Business Fixed Investment vs. Net Cash Flow   •   New Orders   •   Housing Starts vs. Mortgage Rates

Merchandise Exports vs. Trade Weighted Dollar   •   Merchandise Imports vs. Trade Weighted Dollar