Monday, October 14, 2019


U.S. Business Investment Weaker Than Previously Estimated

U.S. economic activity has been significantly impacted by trade and global growth over recent years. With increasing uncertainty of the future amid U.S.-Chinese relations, markets have began to experience repercussions. U.S. business investment has contracted by more than expected, declining by 0.4% higher of an annualized rate than estimated for the second quarter. This has been the steepest decline in almost five years. This was fueled by a large 11.1% annualized rate of decline in spending on structures, meaning that businesses are not making as many long term investments on things such as PP&E (property plant and equipment). Surely, the trade conflicts with China have impacted such decisions and will continue to do so as tariffs remain high. Policies must change in order to revert some of this fallen investment, what should be done in order for this to happen?
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7 comments:

  1. AnonymousOctober 15, 2019 at 10:53 AM

    To increase corporate investment, expansionary fiscal policy could give tax cuts to corporations. This will give them more disposable income to invest in capital, human capital, or whatever it might be which would ultimately contribute to economic development and growth. However, you are right about the tariffs impacting these decisions since everything we import from china, such as steel, is more expensive.

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  2. Lucas CooperOctober 15, 2019 at 2:39 PM

    I believe that this sharp decline in investment is a direct result of government crowding out caused by increased in govt. spending lowering the nation's total saving and investment. The ongoing trade conflict with China only intensifies the issue.

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    1. AnonymousOctober 18, 2019 at 11:05 AM

      Interesting point. I also think this applies. This issue may need some attention in order to uplift current economic activity.

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    2. Nick CanitiaOctober 20, 2019 at 6:53 PM

      I going to have to agree with you on this Mr.Cooper, I believe at the end of the day, an increase in investment is going to have to come from higher taxes and less spending.

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  3. AnonymousOctober 17, 2019 at 7:52 PM

    With so much uncertainty going on in the global economy, no one wants to make any new investments into the economy. New factories will not open and new jobs will not be created. This slowed growth only needs a tiny spark of a negative indicator that points toward a recession until we see some sharp declines in the economy.

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    1. AnonymousOctober 18, 2019 at 11:10 AM

      It has been interesting to see the effects on China in their manufacturing sector. The increasing U.S. tariffs have lead to many manufacturers with locations in China to move to other borders such as Vietnam. We will see how negotiations transpire as these negative effects continue to grow larger on both China and the U.S. (U.S. seeing decreases in business investment)

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  4. AnonymousOctober 20, 2019 at 11:49 PM

    This is all very troubling; we know that in such a globalized world and economy, such policies do not succeed. I hope some common ground can be found politically or I fear the impacts to the economy could be very dangerous.

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