raise funds. Usually firms will add capacity during an economic expansion when profits are on the rise and

consumer demand is high. Business investment is one of the critical ingredients needed to sustain economic

growth. Even in the sluggish 2009 economy, U.S. firms invested $1.4 trillion in new equipment and structures,

in the hope that these investments would generate profits in the years ahead.

Between the end of the recession in 2009 through the second quarter 2013, profits for the S&P 500 companies

grew by 9.7% despite the weak economy, with cost cutting and reductions in input costs driving much of that

amount, according to the Wall Street Journal. Figure 17.2 shows corporate profits after taxes (adjusted for

inventory and capital consumption). Despite the steep decline in quarterly net profit in 2008, profits have

recovered and surpassed pre-recession levels.
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