point that many others have made as well - that a balanced recovery would be impossible without a sustained revival in capital expenditures. my earlier speech surveyed the prospects for various types of investment spending but emphasized the importance for the strength of the investment recovery of ceos'views on prospective returns to capital expenditure and the future of the economy - their animal spirits, if you will. with a little more than four additional months'worth of data, what can we say today about the recovery of investment spending? as i noted in april, the best prospects for an investment rebound in the corporate sector lie in the equipment and software sector, particularly in high - tech equipment. over the summer we have seen indications of at least a moderate pickup in this sector. notably, according to the preliminary gdp estimates, real investment in equipment and software rose at an annual rate of 8 percent in the second quarter. real expenditures for high - tech equipment advanced 34 percent ( at an annual rate ) in the second quarter, a significant step up from the first quarter, and real spending on software rose at a 9 percent rate. perhaps managers have finally decided that they can't put off that it upgrade any longer. even spending on communications equipment was strong in the second quarter. investment in non - high - tech equipment, including both transportation and general machinery, has also improved. in recent months, indicators such as orders data and indexes based on surveys of managers'plans for capital expenditures have strengthened, on balance, suggesting that investment in equipment and software is likely to continue to rise in the near term. by contrast, as i noted in my earlier speech and others have observed, investment in nonresidential structures is not a promising source of growth. the strength in this category in the second quarter was due importantly to an increase in spending in the drilling and mining sector, tied primarily to high natural gas prices. the outlook for buildings, particularly office and industrial buildings, remains weak, as high vacancy rates and low utilization rates persist. however, for better or worse, investment in nonresidential structures has become such a small part of aggregate spending on average that recovery in this sector is not a make - or - break factor for the overall economy. looking beyond the very near term, i see some grounds for optimism that the revival in business investment will persist, laying the foundation for continuing rapid expansion in 2004. first, the strong growth in demand already in train should provide incentives to corporate managers to expand productive capacity, particularly given the efforts

. beginning with the real side of the economy, we see in table 1 substantial agreement among the private - sector forecasters about the prospects for real gdp growth and the unemployment rate through the end of 2004. all the forecasters expect output growth during the second half of this year to be strong, in the general range of 3. 7 to 4. 2 percent. despite the projections of high growth rates, the private forecasters expect the unemployment rate to remain at about the current rate of 6. 2 percent through the end of this year. the private - sector forecasters also see strong economic growth continuing, although generally not accelerating, in 2004. measuring growth as 2004 : q4 over 2003 : q4, global insight forecasts 4. 1 percent growth for real gdp in 2004, blue chip calls for 3. 7 percent growth, macroeconomic advisers sees 4. 0 percent growth, and the survey of professional forecasters looks for 3. 8 percent growth. notably, according to the professionals, even this performance is not expected to decrease the unemployment rate by very much. only macroeconomic advisers sees unemployment in the fourth quarter of 2004 falling as low as 5. 4 percent ; the rest foresee the unemployment rate remaining at 5. 8 or 5. 9 percent during the last quarter of next year. these projections for the paths of growth and unemployment are broadly consistent with forecasts made by the members of the fomc prior to our june 24 - 25 meeting and released shortly thereafter as part of the federal reserve's semiannual monetary policy report to the congress. the fomc members'forecasts for real gdp for 2003 were for growth over the entire year ; they were not broken down by quarter. however, given information about the first half available at the time the committee's forecasts were made, the central - tendency fomc forecast for real gdp growth for the year as a whole almost certainly implies a noticeable pickup in the pace of expansion in the second half of 2003. for 2004, the central - tendency fomc projection for real gdp growth as of the end of june covered the range of 3 - 3 / 4 percent to 4 - 3 / 4 percent, a forecast more optimistic than even current private - sector forecasts of growth for next year and suggestive of an acceleration in real activity from the second half of 2003 to 2004. the central tendency of fomc forecasts for the unemployment rate, as of the end of this past june, called for the