Business Outlays Likely To Give Only Modest Boost To Recovery Tech spending is rising, but excess capacity will put cap on capital plans.(A)

Byline: JED GRAHAM

After another year of cutting costs, paying down debt and creating few jobs, U.S. businesses may finally be in better shape to boost spending in 2003.

But that doesn't mean they'll boost it much.

The threat of war and terrorism looms large in gauging how big of an appetite corporate America will have for taking on risk this year.

"Companies expect another shock," said Steven Wieting, senior economist at Salomon Smith Barney. "If you read business sentiment surveys, it's clear that companies are restraining output, employment and capital spending because they expect a war."

Even absent those risks, any business-driven recovery in '03 is likely to be modest, economists say. While profits are on the rise and spending on equipment should improve, a near-term recovery in commercial construction is doubtful and the manufacturing sector may just tread water as more jobs are shipped overseas.

Critical Element