The economy is improving, but the U.S. is still struggling with an investment drought. Capital spending by business is 26% below the long-term trend, and has not yet recovered to pre-recession levels. By comparison, personal consumption has topped its pre-recession levels, and is much closer to the long-term trend.
Against that backdrop, it is notable that AT&T announced yesterday that it expected a capital spending budget of $22 billion per year for the next three years. To put this in perspective, the *entire* motor vehicle industry invested less than $20 billion in the United States in 2011.
In some ways, AT&T’s willingness to make a public announcement of a capital spending target three years out is a challenge to Corporate America (though the company certainly does not frame it this way). By making this public statement, AT&T is effectively saying that it believes in the communications revolution, data-driven growth, and the strength of the U.S. economy.
Why can’t other companies make the same sort of public announcement of long-term capital spending goals and offer additional certainty to the still recovering U.S. economy? Truthfully, growth is suffering more from investment uncertainty than from regulatory uncertainty. If large companies pledged to maintain or increase domestic capital spending over the next three years, it would go a long way to boosting economic and job growth.
With the election now over, the Obama Administration should hold up AT&T–and other companies willing to invest in America–as examples of what to do right. If Obama wants a high-growth economy with prosperity for all, he needs to encourage more companies to make the same kind of bet on America’s future.