U.S. Businesses to Boost Capital Spending Fivefold

U.S. businesses plan to increase capital spending by 11.6% this year, a fivefold increase over 1987, the government said today.

The Commerce Department said the increase, if realized, would be the biggest advance since 1984, when spending shot up 16.6% as American industry recovered from the steep 1981-82 recession.

The advance would push business investment to expand and modernize production facilities up to a record high of $429.4 billion, after adjusting for the effects of inflation.

The boom in capital investment this year has been one of the main forces driving the economic expansion as businesses have stepped up investment plans in response to heavy demand.

The demand is coming in large part from a rebound in U.S. exports.