BUSINESS
Saturday, January 27, 2018
East Oregonian
Page 9A
Trump: U.S. ‘open for business,’ and economists mostly agree
By CHRISTOPHER RUGABER
AP Economics Writer
WASHINGTON — President
Donald Trump highlighted his
tax cuts and deregulatory efforts
with a salesman’s pitch to an elite
economic forum in Switzerland on
Friday: The United States, he said,
is now a far more inviting place for
foreign companies to spend, invest
and build.
“We are competitive once
again,” Trump told an assemblage
of international business executives,
financiers and academics.
While discounting some of the
president’s more grandiose claims,
many economists agree that he has
generally made the United States
more welcoming for businesses.
Last month, Trump signed a
tax package that cut the corporate
income tax to 21 percent from 35
percent. The Republican Congress
has also passed laws to overturn
at least 15 rules put in place by the
Obama administration, and the
administration has put dozens of
other regulations on hold. Those
steps should encourage more
overseas businesses to move to the
United States or expand existing
operations, economists said.
“It was a vastly exaggerated
claim, but there is some truth to it,”
said Adam Posen, president of the
Peterson Institute for International
Economics.
Before Trump, “the high
marginal tax rate and some of the
regulation on specific industries did
mean the U.S. was not always the
first choice,” Posen said.
Nicholas Veron, a fellow at
Bruegel, a think tank in Brussels,
Belgium, said that among European
businesses, “there is some agree-
ment that the tax plan will make it
“I do think tax
reform will spur
foreign direct
investment in the
United States.”
— Nancy McLernon,
CEO of Organization for
International Investment
Laurent Gillieron/Keystone via AP
U.S. President Donald Trump addresses a plenary session in the Congress Hall the last day of the
annual meeting of the World Economic Forum, WEF, in Davos, Switzerland, Friday.
more attractive to invest in the U.S.”
“Compared to other things the
president says, this looks reasonably
based in fact,” Veron said.
Still, Posen suggested that Trump
missed an opportunity to speak up in
favor of the global trading system or
to offer specific proposals on how
to improve, say, the protection of
intellectual property rights.
Corporate executives in Davos,
Switzerland, for the annual World
Economic Forum meeting were
generally bullish about Trump’s
agenda and the business climate he
is helping build in the United States.
“Since you have been successful
with tax reform, we decided to
develop
next-generation
gas
turbines in the United States,” Joe
Kaeser, CEO of the German engi-
neering firm Siemens, told Trump
at a dinner Thursday night. Siemens
employs roughly 50,000 people in
the United States.
Others said they were encour-
aged by signs that U.S. economic
growth may accelerate this year,
in part because of the tax cuts for
consumers and businesses, which
could encourage more spending and
investment.
“It’s kind of amazing to have all
your customers talking about adding
jobs and growing their business,”
Bill McDermott, CEO of business
software company SAP, told Trump
at the dinner Thursday.
Still, foreign investment in the
United States had already been on
the upswing in recent years, well
before the Trump administration
took office a year ago.
Foreign investment in factories
and other facilities and foreign
purchases of U.S. businesses
reached $477 billion in 2015,
a record high, before declining
through the third quarter of 2017,
according to government data
analyzed by the Organization for
International Investment, a trade
group. (Those figures don’t include
temporary investments, like the
purchase of U.S. stocks by overseas
investors.)
OFII represents overseas compa-
nies with subsidiaries in the United
States, such as Samsung, Bosch,
Nestle and Toyota.
“America’s always been open for
business,” said Susan Aaronson, a
professor of international affairs at
George Washington University.
Aaronson said she thinks the
beneficial impact of the tax cuts
has been exaggerated. Businesses
around the world crave stability,
and the tax cuts will likely have to
be revisited in the coming years to
address burgeoning U.S. deficits, she
said. That prospect could make last
year’s tax package less appealing to
some companies, she added.
The United States had received
about 37 percent of all global invest-
ment in 2000, a figure that tumbled
to 15 percent in 2008, according to
data analyzed by the Organization
for International Investment. The
decline reflects the impact of the
Great Recession and China’s admis-
sion to the World Trade Organiza-
tion, which made it a more attractive
destination.
Economy grew at 2.6 percent
rate in fourth quarter
WASHINGTON (AP) —
The U.S. economy grew at
a rate of 2.6 percent in the
final three months of last
year, helped by the fastest
consumer spending since
2016 and a big rebound in
home construction.
The
fourth
quarter
advance in the gross domestic
product, the country’s total
output of goods and services,
followed gains of just above
3 percent in the second and
third quarters, the Commerce
Department reported Friday.
The slowdown in the
October-December period
reflected a worsening trade
deficit and less growth in
inventory restocking by
companies.
For all of 2017, the
economy grew 2.3 percent.
That is a significant improve-
ment from a 1.5 percent gain
in 2016 but little changed
from the modest 2.2 percent
average growth rate turned
in since the Great Recession
ended in June 2009.
Economists are looking
for even better growth
this year, propelled by the
$1.5 trillion tax cut that
President Donald Trump
pushed through Congress
in December. The Trump
administration
contends
that its economic program
of tax cuts, deregulation
and tougher enforcement of
trade laws will lift economic
growth to sustained rates of
3 percent or better in coming
years.
Trump has said his tax
plan will serve as “rocket
fuel” for the economy by
prompting Americans to
spend more and businesses
to step up investment.
Economists,
however,
believe the growth spurt will
be short-lived.
“Deficit-financed tax cuts
will provide some near-term
juice to the economy but it
will prove to be temporary
because we are already at
full employment and the
Federal Reserve will respond
by raising interest rates more
aggressively,” said Mark
Zandi, chief economist at
Moody’s Analytics.
Michael Pearce, senior
U.S. economist at Capital
Economics, said that the
imports surge that widened
the trade deficit reflected a
pay-back from port disrup-
tions caused by hurricanes in
the third quarter. He forecast
solid growth in coming
quarters.
“The U.S. economy had
plenty of momentum even
before the tax cuts take effect
this year,” Pearce said.
Treasury Secretary Steven
Mnuchin, interviewed on
CNBC, described the modest
slowdown in the fourth
quarter as a short-term aber-
ration.
“We’re not concerned
about any one quarter which
could be revised up or down,”
he said.
Mnuchin said the admin-
istration was very happy
with the initial reaction
from U.S. companies to the
new tax bill, which he said
had already generated pay
bonuses for more than 2.5
million Americans.
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