In Boost For Economy, Companies Spend On Equipment

JEANNINE AVERSA

WASHINGTON (AP) — Businesses are finally willing to spend more money on equipment, a healthy sign for the economic recovery.

For the first time in nearly two years, companies ponied up more money for a category called "equipment and software" in the third quarter of the year.

It isn't a huge growth rate — just 1.1 percent, according to the government's report last week on U.S. economic growth. Still, equipment and software are a broad and important category of items made by such companies as Deere & Co., EMC Corp. and General Electric Co. It includes computers, software, medical equipment, industrial engines, autos, planes, furniture and farm machinery.

Business spending is especially crucial now because consumers, who normally drive a recovery, aren't doing so this time. Many shoppers are too squeezed by job losses, flat wages, tight credit and high debt.

The higher spending doesn't necessarily mean companies are swimming in cash. But in a twist on the Ant and the Grasshopper fable, some businesses managed to save enough during the recession to spend more now, analysts said. Others can't get loans to expand their plants and instead must upgrade the equipment they have, analysts said.