Tags: Corporate | Cash | Obama

Companies Sock Away Cash Since Obama Took Office

By    |   Wednesday, 21 Sep 2011 08:00 AM

Corporate balance sheets have made a significant recovery since the recession ended.

According to data provided by the Federal Reserve, the net worth of U.S. corporations has increased about 11 percent since the end of 2008.

Especially noteworthy is the growth that can be seen in the amount of cash that corporations are holdings. At the end of the second quarter, corporations had more than $1.6 trillion in immediately accessible cash holdings, an increase of 43 percent since George W. Bush left office.

More than 11 percent of corporate net worth is in cash, compared to about 8 percent in 2008. Cash includes only the amounts that corporations are holding in checking accounts, saving accounts, and money market instruments.

American households, in total, have also recovered from the deep losses they suffered in the real-estate and stock-market crashes of the past few years. According to the Fed data, overall net household worth is about 15 percent higher than it was at the end of 2008, but U.S. households are holding almost exactly the same amount of cash now that they held then.

The recovery in household balance sheets is partly due to a recovery in the stock market. Consumers have also reduced debt and that the decrease in liabilities has also contributed to the higher net worth.

Corporate balance sheets, on the other hand, show an increase in liabilities. Some of this is because corporations are issuing bonds to take advantage of low interest rates, and then holding the cash since they can’t find any safe investment.

Some are arguing that the political atmosphere has made business reluctant to invest and this data offers some support to that idea.

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MichaelCarr
Corporate balance sheets have made a significant recovery since the recession ended. According to data provided by the Federal Reserve, the net worth of U.S. corporations has increased about 11 percent since the end of 2008. Especially noteworthy is the growth that can...
Corporate,Cash,Obama
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2011-00-21
Wednesday, 21 Sep 2011 08:00 AM
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