Morgan Stanley has raised its U.S. GDP forecast, citing stronger capital expenditure outlook as a key driver of economic growth. The investment bank's analysts point to increased business investment in equipment and infrastructure as a sign of corporate confidence in the economic recovery.

Capital expenditure, or capex, represents spending by businesses on physical assets like machinery, technology, and facilities. Higher capex typically signals companies expect sustained demand and are willing to invest in expanding their productive capacity. This uptick in business investment could help offset potential slowdowns in consumer spending or government stimulus.

The revised forecast reflects Morgan Stanley's view that the economic recovery is broadening beyond consumer-led growth to include more balanced contributions from business investment. This shift could provide more sustainable momentum for the economy, reducing reliance on government support or household spending alone.