STATE OF BUSINESS: The Free Spenders

As Labor Day approached, the U.S. was in a spending mood. The freest with their funds were those who pinched pennies most tightly only a few months ago: U.S. industries. Last week Washington economists reported a fresh surge in expenditures for new plant and equipment. Capital investment has climbed from an annual rate of $30.6 billion in the first quarter to $32.3 billion in the second to a brisk $33.4 billion, may well hit $35 billion in the fourth quarter—if a prolonged steel strike does not sabotage the economists' projections.

Long-Range Challenge. One reason for the rise is that U.S....

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