John Maynard Keynes used the phrase "animal spirits" in 1936 to highlight the role confidence plays in the economy. He saw how investors and businesspeople must go with their guts in uncertain times and put their money to work if the economy is to grow and the nation to prosper. Judging by the recent surge in the stock market, animal spirits are certainly back on Wall Street. Undeterred by worries a bubble may be building, investors have piled into equities, pushing the Standard & Poor's (MHP) 500-stock index up about 60% since March.
In the executive suites of Corporate America, however, confidence has been slower to return. Shell-shocked by the worst recession since the 1930s, company chieftains have been focusing on survival rather than expansion. That caution has held the economy back as businesses have kept tight control over hiring and spending.