Welcome to the third quarter. Its first week is a busy one for economic-data releases, with new data on purchasing-manager confidence, jobless claims, nonfarm payrolls and the unemployment rate.
Among the figures, here's perhaps the central question for this quarter: Why is private investment still so weak? And is it about to roar back?
Spending on personal consumption, adjusted for inflation, has grown $441 billion, or 4.7 percent, since the start of the recession. Real private investment, by contrast, is still $206 billion short of its pre-recession level.
It's only when you put aside homes and commercial structures that investment has grown. And that gets to the problem: Businesses and households have been reluctant to make longer-term economic commitments. Most important, they're afraid of building. Investment in residential and commercial real estate, once 9 percent of gross domestic product, is still half that. (See the graph above.)
Yes, they've bought new software and a new forklift, or a new car and a new dishwasher. But they've been shy about getting serious. No wonder firms have been slow to hire: New employees are big investments, too.
Investment might pick up this quarter for two reasons. First, the U.S. is underbuilt. Second, the window of opportunity for long-term investment is closing.
The economy overbuilt in the 2000s. But it has more than undone that binge. If you assume the U.S. should allocate 4.5 percent of GDP each year to residential investment, the cumulative shortfall has now reached 20 percent of GDP -- as much as the earlier excess, and equivalent to five years of normal construction.
Long-term interest rates have risen swiftly in the past month. Businesses and families know that the cost of borrowing is likely to keep rising. So is the price of a new home. The construction industry won't be idle much longer. The suspicion that time is running out will force others to move pre-emptively.
The main threat to investment prospects is that a still-fragile recovery will lose the support of both monetary and fiscal policy over the next two years. Sequestration is reducing federal spending and the Federal Reserve is moving toward a conditional "tapering" of its bond-buying program. All this makes forward-looking businesses nervous.
Another risk comes from overseas. Europe may have averted financial crisis, but China and other emerging markets haven't looked worse in years. American businesses can't count on hungry foreign buyers this year or for some time to come.
It's good that Americans are consuming again. But the larger test for the economic recovery, and for this quarter, is whether it can convince them to invest.
(Evan Soltas is a contributor to the Ticker. Follow him on Twitter.)