Supply chain disruptions, inflationary pressure, and potential tax and procurement policy changes drive concern of the U.S. business climate for international companies
WASHINGTON – Nancy McLernon, president and CEO of the Global Business Alliance (GBA), issued the following statement after releasing the latest Inbound Investment Survey:
“Given what we know about the vital role international companies play in the U.S. manufacturing and innovation sectors – today’s findings highlight how increased foreign direct investment (FDI) could continue to positively impact the U.S. economy and workforce. The survey also shows how the recent passage of the Infrastructure Investment and Jobs Act will help drive that growth, but potential discriminatory tax and procurement policy changes could stunt our nation’s economic competitiveness. Further, some foreign companies in the United States are shifting away from China as a result of supply chain disruptions and political sensitivities.”
Both the GBA U.S. Business Climate IndexTM and the GBA Employment Expectation IndexTM saw marked increases compared to the previous survey levels. While these major U.S. employers continue to have reservations about the U.S. business climate, their expectation for increasing employment over the next six months reached an all-time high, with nearly half (49%) of respondents saying they plan to add jobs.
GBA members have been overwhelmingly impacted by supply chain disruptions, with 67 percent indicating shortages have had a moderate or significant impact on their U.S. operations. Less than half (45%) held that view of COVID-19. More than one-quarter (29%) of respondents expect to diversify their global supply chains, with 18 percent indicating plans to become less reliant on Chinese suppliers.
“Since the beginning, the private sector has led the way in overcoming the pandemic,” adds Ms. McLernon. “Our members mobilized financial resources and tapped into industry know-how from around the world to address the health crisis and mitigate the economic impact on their U.S. workforce. Now inflationary pressure and supply chain delays are creating an even more challenging environment, so Washington must act quickly to curb inflation and resolve the supply chain disruptions that are having a greater impact on our members’ U.S. operations than the pandemic itself.”
Key Takeaways
- GBA Employment Expectation IndexTM, which tracks the sentiment of GBA members over time, showed a dramatic increase job growth optimism, reaching the highest level since the survey’s inception in 2010.
- GBA’s Business Climate IndexTM, jumped 33 points since May of 2020. While companies remain pessimistic about the U.S. economy compared to six months ago, that pessimism is lessening.
- Supply chain disruptions are having a greater impact on U.S. operations than the COVID-19 pandemic – with many companies indicating their intent to diversify global supply chains, including reducing their reliance on Chinese suppliers.
- So-called “Buy American” procurement policy changes also registered as creating a potentially large negative impact by several employers.