Friday, June 8, 2012

Cash Hoard Levels Off

One of the frustrating things about our sluggish economic recovery has been the notion that American corporations have been sitting on unprecedented piles of cash, waiting for the right moment to invest it back into the economy. It was reported that, at the end of last year, American businesses had more than $2 trillion in cash or cash equivalents sitting on the sidelines.

But yesterday, the Federal Reserve made a serious revision to that figure. As of the end of March, corporations (other than financials) were sitting on $1.74 trillion in liquid assets, according to the Fed's Flow of Funds report. That's about $500 billion less than had been previously reported.

Still, it's an astonishing sum of money. Ten years ago, in 2002 that figure was right at the $1 trillion mark. According to the new data, that number grew fairly steadily through 2009, but rather than continuing on that growth curve, it now appears to have leveled off.   

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