Biden’s huge dreams fulfilled by big firms
US companies are pumping enormous amounts of money into new technologies at a blistering pace, fueling President Joseph Biden’s plans to hype America’s vast economy as he rolls out his ideas.
The jump in corporate investment in computer and other information technology is the biggest the United States has seen in decades — and not just in comparison to what was spent during the pandemic recession.
Now, as the nation emerges from the bruising crisis and trillions of dollars in government spending flows through the economy, nearly 60 percent of chief executives at large corporations expect to increase overall investment this year as they work to meet surging consumer demand and become more optimistic about the outlook of Biden’s economy, a new survey shows.
“There is a real awakening from a decade-long slumber” in business investment, Skanda Amarnath, director of research and analysis at Employ America, a nonprofit group that advocates for workers, said. “This is a healthy and welcome development.”
Biden has been promoting his plans to spend trillions more on
shoring up US infrastructure as crucial to the country’s long-term economic health and competitiveness and the key to producing more well-paying jobs.
If businesses keep up the pace of investment in information processing equipment for the rest of the year, it would amount to $610 billion, compared to an annualized $494 billion in the first quarter of 2019 — a jump of 23.5 percent.
But economists caution that it’s too early to tell whether the burst of investments over the past several months will continue.
Daron Acemoglu, a professor at the Massachusetts Institute of Technology who studies the effects of automation on labor, said it matters greatly whether the technology makes it easier for people to do their jobs or replaces them.
Acemoglu warned that tax policy provides some incentives for companies to replace workers by making it more expensive to employ people than to buy machines, even if it doesn’t even necessarily increase output.
But there might also be counterintuitive benefits to better technology, Because the US population is aging, the workforce is projected to be smaller over the next decade, Susan Lund, a leader of the McKinsey Global Institute, the firm’s economic research arm, said.
High productivity should also help ensure that rising wage lead to more economic benefits for worker, rather than potentially feed inflation. A recent study from McKinsey found that productivity could pick up more than a percentage point each year through 2024 as tech investment grows.