According to analysis by the US Department of the Treasury, American businesses are thriving because they are investing their earnings productively. Despite high interest rates, business investment has exceeded expectations in the post-pandemic expansion, with an additional $430 billion invested since 2019 compared to historical patterns. This outperformance is seen in comparison to typical economic expansion behavior, post-COVID forecasts, and traditional investment models.
The Biden Administration is focused on creating favorable conditions for business investment as part of its post-COVID economic agenda. The CHIPS & Science Act and Inflation Reduction Act aim to encourage private investment, while efforts to increase competition and reduce barriers for new firms have been highlighted. Factory building has made a significant contribution to business investment growth since the pandemic, with intellectual property investment also on the rise.
The outlook for future business investment growth is positive, with firms experiencing high returns on capital and a surge in new business applications. This confidence in future returns is supported by the belief that public investments are not crowding out private capital. Founders are starting new businesses at record rates, indicating a strong investment climate ahead.
