"My colleague Robin Harding wrote an analysis in the FT a couple of days back, digging into an intriguing conundrum: why do corporate profits in the US continue rise, while corporate investment keeps falling? The piece offers a variety of explanations, from the recession to technological change, but there is another culprit worth considering: investment that has moved abroad.
Robin describes the “investment down, profits up” conundrum like this:
This change is profoundly odd. Economic theory says investment is driven by profitable opportunities on one side and the cost of capital on the other. High profits suggest there are decent opportunities to make money; historic lows in interest rates and highs in the stock market mean that capital is dirt cheap. Yet investment does not follow."
'via Blog this'
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