Looking Up: Inside a Shaky Economy, Signs of a Rebound Emerge --- War Clouds Could Still Derail Pent-Up Spending Plans On Factories, Technology --- T.G.I. Friday's Iraq Scenario
In November, John Dillon, chairman of the Business Roundtable, said a survey of the group's 125 blue-chip members found most planned to freeze or cut capital spending in 2003. Yet Mr. Dillon's company, International Paper Co., isn't one of them -- and it could be in the vanguard.</br></br>After paring capital spending by a third over the last four years, the company expects to boost it 10% to 15% in 2003 from last year's level. "During hard times, you can cut back on capital" improvements, Mr. Dillon, International Paper's CEO, says. "But over time you have to spend to improve your competitiveness." With cash flow rising, the company overhauled machinery in Arkansas that makes juice containers and plans to upgrade its online-order-management system to speed answers to customer queries.</br></br>A resilient economic expansion may be in the making, starting in the same place that the slump began: corporate boardrooms. The U.S. economy of 2002 may be remembered for its resemblance to the economy of 1992: stuck in a rut, depressed about its prospects, damned by Democrats -- yet poised for an impressive takeoff.</br></br>A business-spending bust drove the economy into recession in March 2001 and has hobbled the recovery ever since. But now, the pieces required for a rebound are falling into place: Profits are recovering. Balance sheets are stronger. Investor panic is subsiding. And perhaps most important, businesses are finding it harder to keep postponing new investment.</br></br>Just yesterday, a closely watched survey found that manufacturing activity rebounded in December, as new orders surged to a nine-month high, according to the Institute for Supply Management. The news helped send stocks soaring on the first trading day of the new year.