Foreign Investment in the U.S. Has Nosedived

SK Ashby
Written by SK Ashby

According to official records from the federal Bureau of Economic Analysis, foreign investment in the United States has been in a free-fall ever since President Obama left office.

Call it a 'nosedive' or a 'free-fall' or whatever, neither term feels adequate to describe this.

From CBS News:

The plunge in foreign investment may be hastening a transition to a "post-American world economy," Adam Posen, president of the Peterson International Institute, argued last week in article in Foreign Affairs magazine that tracked the investment drop. "It's a world in which the U.S. is less of a safe haven [for foreign capital]," he said.

Net foreign direct investment, or net FDI in economists' shorthand, dropped to $51.3 billion in the first quarter, a 37 percent fall from the same quarter in 2017 and a 65 percent decline from the first quarter of 2016, based on data from the U.S. Bureau of Economic Analysis released earlier this month.

I probably don't need to belabor the fact that this could get much worse if Trump goes through his plan to impose tariffs on all imports from China and/or his plan to impose tariffs on cars and car parts.

Foreign investment has already declined as much as it did during the Great Recession and the trend is probably not going to stop where it is now.

You may ask why anyone should care about this and the answer is jobs. Foreign companies bring some of their own workers with them when they invest in the United States, but they typically employ Americans over long periods of time in secure jobs that are less dependent on the quarterly whims of the market.

A timely and appropriate example of this is investment by foreign automakers. Foreign automakers employ tens of thousands of Americans in stable, secure jobs that may not be so stable anymore if Trump goes through with his tariffs on car parts.