The US economy is operating within the second longest expansionary period in its history. Following the calamity of the financial collapse of 2008/09, the US has experienced 110 months of economic expansion (including the recovery period immediately following the recession).
Concurrent with this growth and now almost unprecedented low unemployment, president Donald Trump has decided it is time to restructure the global economic order and capture an even greater share of global investment and job creation. He claims hardship and woe, suggesting that the US is somehow impoverished and unfairly treated in a world order tilted against it. To challenge this notion only requires examination of current and historical competitiveness and FDI data and rankings.
One recent report from ATKearney shows that the US has topped their Foreign Direct Investment (FDI) Confidence Index for six consecutive years. As I’ve written previously, market size, market wealth, innovation and productivity are all contributing factors to this leadership position. In this same study, Canada ranked second for investment confidence globally, which should be considered a good thing for the US and the North American economy overall, although right now the US seems more interested in taking Canada down a notch or two.
In another study, the Brookings Institution focused on how the US compares with 18 other countries in manufacturing. It concluded that the top ranked countries for overall manufacturing environment are the UK and Switzerland (tied in their scorecard), closely followed by the US, then Japan and Canada (also tied). China now leads the world in total manufacturing output (20% of global total) compared with US output (18% of global production). This may be a point of pride in China and a source of discontent in the US, but they are only part of the economic and FDI picture. It must be noted that manufacturing as a percentage of total GDP is 11% to 12% in the US and Canada and a whopping 27% of total Chinese economic output. Mexico, for comparison, is 19%. These percentage figures represent key macro indicators in the long-run economic development of the countries.
When considering national output by competitors, it is also worth keeping in mind the FDI that originates from one’s national rivals. While both Canada and China are under pressure from Washington to improve trade and investment dynamics with the US, they are, respectively, the fourth and fifth ranked countries globally creating jobs and making investments in the US, behind Germany, Japan and the UK. Consider, too, that the US attracted more FDI than any other country in the world in 2017 by more than doubling second place China’s inbound FDI. It seems the US is doing fine after all.
Gregg Wassmansdorf is senior managing director, consulting, at Newmark Knight Frank, a global real estate services firm. He is a member of the Site Selectors Guild.