Put on a happy face.

IT'S an article of faith that businesses aren't investing. Corporate executives are sitting on their hands, waiting for war with Iraq to start -- and end -- before committing capital to new products, new technology or additional capacity.

Unfortunately the premise doesn't hold up under examination. Business investment in plant and equipment rose 2.5 percent in the fourth quarter of last year. The increase wasn't big compared with the double-digit gains witnessed regularly in the 1990s. Viewed in the context of eight consecutive quarterly declines in capital spending, however, a positive fourth-quarter reading was unqualified good news, even if it was greeted with denial and congenital negativism.

The increase in investment helped lift real gross domestic product by 1.4 percent in the fourth quarter, twice the Commerce Department's initial estimate. With consumer spending softening, the economy needs something other than government spending to carry the day.

While investment in structures, which typically lag the business cycle, fell 9.8 percent, spending on equipment and software rose 6.6 percent, according to the Commerce Department. It was the third consecutive quarterly gain.

Someone, somewhere is investing in something.

Investment is off to a strong start in the first quarter as well. Shipments of non-defense capital goods excluding aircraft, which economists use as a proxy for equipment spending, rose 4.1 percent in January. The series stands an annualized 11.6 percent above the fourth-quarter average, according to Henry Willmore, senior U.S. economist at Barclays Capital Group.

Willmore warns about extrapolating too much from one month's numbers. "The series on durable goods orders and shipments doesn't differentiate between foreign and domestic," he says. "And eliminating aircraft means excluding something that's been weak."

Still, with capital goods prices falling, Willmore says the inflation-adjusted increase in equipment and software spending may be close to 15 percent in the first quarter.

The weakness in the aircraft industry is "masking a more normal turnaround in capital spending," says Jim Glassman, senior U.S. economist at J.P. Morgan Chase. "It's nonsense to say companies aren't investing."

Orders for capital goods -- today's orders become tomorrow's production -- rose 5.4 percent in January to a level not seen since June 2001.

"Look down the right-hand column of the (durable goods) report, arid all the year-over-year changes for orders and shipments are positive with the two exceptions," says Joe Carson, an economist at Alliance Capital Management.

Cisco Systems had record profits in the fourth quarter. Intel Corp. had record unit shipments in the fourth quarter. You'd never know it from listening to the chatter. People "use every reason we can think of to spin this in a negative light," says Steven Wieting, senior economist at Salomon Smith Barney.

The February report from the Institute for Supply Management corroborated the technology rebound. Eleven of the 20 industries surveyed, including all three technology categories, reported that new orders rose at a faster pace than in the previous month.

That's riot to say that the ISM Index was all good news. At 50.5, the purchasing managers' index was down 3.4 points from January and only a hair's breath above the dividing line between expansion and contraction.

This race to the bottom (line) will eventually play itself out. If you believe what you read, once the Butcher of Baghdad is deposed, businesses will find renewed reasons to invest. If not, maybe the improvement to date will get the respect it deserves.