Notice something about the U.S. economy?

Consumer confidence is plunging like a stone—in July the consumer confidence index fell to 50.4. That’s down from the 54.3 (revised) reading for June and the lowest reading since February.

But corporate customers are buying—servers, computer storage devices, trucks, whatever, especially if, because of the Great Recession, they had put off purchases for two or three years and if the new gear is more powerful, more energy efficient, more something than what it would replace. We’ve seen this in the earnings reports for the second quarter and in the guidance for the third quarter from Intel (INTC), and EMC (EMC), and from engine-maker Cummins (CMI).

On July 27 before the New York Stock Exchange opened Cummins reported second quarter earnings of $1.25 a share. That was 34 cents a share above Wall Street projections. Revenue climbed by almost 30% to $3.21 billion, easily exceeding the consensus expectation for revenue of $2.84 billion. The company also raised its projections for total 2009 sales to $13 billion from an earlier $12 billion.

The company also said that EBIT (earnings before interest and taxes) had climbed to 12.5% in the quarter and would come in at 12% for the entire year. That is the highest margin that the company has produced in 25 years.

Cummins recorded big gains in international sales (64% of total sales.) International revenue climbed by 51%.

The engine business shows exactly how sweet a spot in the cycle this is for Cummins. In the quarter engine shipments climbed by 60%. At the same time, Morningstar estimates that the cost of producing an engine has dropped by 20%.

The company has said repeatedly that it doesn’t expect solid growth in its key North American heavy duty truck market until the end of 2010 or early 2011. That’s important for investors—the last thing you want to do is to buy a cyclical stock like Cummins when earning are near a peak.

Cummins has said that it expects to earn $4.70 to $4.80 a share for all of 2010. That would be substantially above the $3.97 a share earnings recorded at the last peak of the cycle in 2008. Industry projections now call for production of Class 8 heavy duty trucks in North America of 145,000 in 2010 and 236,000 for 2011.

The company raised its dividend on July 13 by 50%.

As of August 12 I’m raising my target price to $85 by March 2011 from a previous of $80.