During the final quarter of 2003 we saw the US economy grow at a robust 8.2 percent marking the strongest single quarter growth rate since 1984. The main reason for such impressive and expansive growth lies solely in the lap of the consumer (individual) and his or her family spending.

We now look to corporate spending to keep the economy afloat and the reasons for this are simple ? decreased spending power of the consumer (increasing levels of household debt), improvement in the growth and health of companies' revenues, temporary stimulus (US legislation) aimed at increasing capital spending.

In the latter half of 2003 consumers bought homes, cars, major appliances and anything else they could secure historically low interest rate loans for. In fact the average household debt is now at a 20-year high (credit cards and home loans inclusive).

So where do we go from here?

The consumers' financial strength is now weakening, and the economy needs to sustain its projected growth rate (Gross Domestic Product) of four to five percent as this expectation is priced with in the market and anything less would be grounds for a sizable (and expectable in some minds) correction or pull back in the market.

The burden of spending has now been passed from consumers' hands to that of corporations. Corporate spending in the US has begun to rebound and there is good reason to believe that it will continue, and be sustainable, well into the middle of 2004.

Businesses who have largely held off on capital spending in recent years have kept to themselves what excess they were able to generate. During this bid to increase retained earnings during challenging economic times, equipment has aged, opportunities for growth are now plausible (capital expansion etc.) and balance sheet figures have improved. According to a report recently released by Merrill Lynch, the average age of equipment at companies in the Standard & Poor's 500 index was 6.34 years at the end of the third quarter 2003. This figure is slightly higher than the five-year average of 5.74 years.

As mentioned earlier the third quarter of 2003 the US economy saw an impressive growth rate of 8.2 percent, indicating that company growth and revenue was on the increase. A survey in December by the Business Roundtable found that 35 percent of surveyed companies expect to increase their capital spending over the next sixth months into mid-2004.

Good news for corporate spending isn't done yet. Tax legislation in the US has introduced incentives to increase corporate spending. A special depreciation allowance introduced in 2003 should continue to encourage corporations to invest and expand. Under this new legislation the allowance offers accelerated depreciation of qualified capital expenditures made before January 1, 2005.

To summarise, decreased spending power of the consumer coupled with improved health of corporate balance sheets, and government incentives for company's to spend supports the notion that increased economic growth is here to stay at least a short while.