WASHINGTON, Oct. 11, 2016 /PRNewswire-USNewswire/ -- The Progressive Policy Institute (PPI) today released a new report, "U.S. Investment Heroes of 2016: Fighting Short-termism," its annual ranking of the top 25 nonfinancial American companies by their capital spending in the United States. In total, the top 25 American companies invested an estimated $176.9 billion here at home in 2015, a 2.9 percent increase from 2014. This is a substantially smaller increase than the 12.7 percent jump we saw in 2014 over 2013.
Authored by PPI Economist Michelle Di Ionno and Chief Economic Strategist Michael Mandel, the report provides an exclusive estimate of domestic capital spending by major U.S. companies and identifies the companies resisting short-termism and making long-term investments in infrastructure, buildings, equipment, and software. PPI calls these companies "Investment Heroes" because their capital spending is helping to raise productivity and wages across the country.
Similar to last year, the top "Investment Heroes" by industry were telecom and cable providers, followed by energy production companies, technology and Internet companies, and energy distribution companies. These four categories comprised 18 out of the 25 companies on the list, and accounted for nearly 80 percent of the total investment.
This year's report adds two new dimensions. The first is an analysis of capital spending trends for the first half of 2016, as compared to the first half of 2014, since investment has weakened in the last two quarters. Many of the top companies on this list show global capital spending down in the first half of 2016. The decline in capital spending is particularly notable in the telecom and energy sectors, most likely as a result of regulatory disruption in the telecom industry and falling oil prices.
Second, the report adds this year a comparison of recent investment trends in the private versus the public sector, in an effort to put the business investment drought in context. PPI finds that government capital spending has fared far worse than its private sector equivalent. In particular public sector spending on long-lived assets such as highways and streets has declined sharply in real terms. Meanwhile, government spending on research and development, the quintessential long-term investment, has far lagged private sector outlays on R&D. This suggests that government policymakers suffer from a worse case of short-termism than corporate executives.
The report concludes with a discussion of the components of a new policy framework to promote long-term private investment, including regulatory improvement. That's especially true in highly-regulated industries, such as healthcare, where layers of rules may discourage investment and innovation, and in telecom, where the FCC is upending its regulatory regime potentially undercutting the incentives for capital investment.
Another policy initiative designed to foster long-term, patient investment in the U.S. is pro-growth tax reform that closes inefficient and inequitable loopholes, lowers the corporate income tax, and provides incentives for investment in intangibles. PPI also urges Congress to adopt a capital budget, in order to make it easier for the federal government to make long-term investments.
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SOURCE Progressive Policy Institute