In all of the political maneuvering of the past year, much of the media neglected a critical economic story: business and industry have at last begun to invest actively in new equipment and production facilities, something they had failed to do so far in this recovery. This turn will help buoy overall growth rates in 2018, as it did last year. More important, it will, if it persists, lay a foundation for future prosperity – for firms and workers – something threatened by the earlier paucity of such spending.

Statistical evidence on the change is striking. In 2015 and 2016, real business spending on new facilities actually declined some 6.0%, while spending on new equipment remained essentially flat. Over the four quarters of 2017, real spending on facilities has risen 3.7%, while spending on new equipment has jumped 8.8%. Other data suggest that the new turn will likely persist. New orders for non-defense capital equipment, which had declined on balance during 2015 and 2016, have risen 8.0% over the last twelve months.

For the immediate period ahead, this enthusiasm for expansion should boost the economy’s overall growth rate. In 2017, it added almost 0.8 percentage points to the gross domestic product’s (GDP) overall real growth rate. Put another way, were it not for this spending boost, the 2.5% GDP growth over the four quarters of 2017 would have averaged only 1.7%, a poor showing even by the standards of this otherwise sluggish recovery. On the reasonable expectation that such spending growth continues in 2018, it is easy to see overall GDP growth for the year come in closer to 3.0%.

This turn in business spending will also carry more long-lasting benefits. It should, in fact, do nothing less than rebuild the economy’s underlying productive power and efficiency, something that the past paucity of such spending had begun to undermine. According to data from the Bureau of Economic Analysis, up until this year’s turn, business investment spending barely exceeded depreciation rates by 30%. Typically, at this stage in a recovery new capital spending exceeds depreciation by up to 50%. The older, slower rate of spending had begun to deny workers the support they need to increase their productivity. It is then little wonder that output per hour all but stalled, growing in 2015-16 at barely over 0.5% a year. And since business cannot for long give real wage increases in excess of productivity growth, it is also little wonder that real hourly compensation rose at barely over a 1.0% annual rate during this time. Indeed, hourly compensation only reached that rate of growth because business had relied more on overtime than new hiring.

It is a too early to look for a productivity response to this year’s surge in business spending. The effect is cumulative. Nonetheless, the data offer tentative signs. Output per hour, for instance, after falling during the first quarter of 2017, did pick up in the second and third quarters, rising at a 2.5% annualized rate. The business spending on new and presumably more advanced equipment would have to persist longer to make a lasting change in productivity prospects, but the improvement does seem to have begun. Should the accelerated capital spending persist, it would rebuild a base for increased output, increase efficiency, increase profitability, increase wages and for a generally more prosperous economy.

Whether this new attitude in business and industry persists will surely depend in large part on the success of Trump’s economic policy. The tax reform, though far from a perfect piece of legislation, should on balance serve this welcome trend. The business tax-rate cuts alone should encourage still more enthusiasm about expansion, as will the provisions that allow expensing of capital investment. Much also will hinge on White House efforts to lift regulatory burdens on business and on any progress toward infrastructure refurbishment, the one by reducing costs to industry, the other by multiplying the benefits of private business spending. Entitlements reform, though politically doubtful, would add a further encouragement. It is less that entitlements directly burden business, but rather that reform would promise federal budget relief and thereby brighten economic prospects generally.

Uncertainties remain, both political and economic. They always do. But this past year’s business behavior, coupled with the success of tax reform, offers reason for optimism on this matter, for 2018 but more significantly for the economy’s underlying, longer-term prospects.