US Businesses Hoard Cash While Millions Remain Unemployed
America remains a nation of jobless workers; nearly 15 million Americans have no job to get up to each morning. Among them are 70,000 West Virginians who also remain unemployed. While the 2008 US recession officially ended in June 2009 large US corporations are no worse for the wear and tear as they have managed to borrow and hold onto more cash than at any time since 1964.
American businesses are sitting pat on huge stockpiles of cash refusing to participate in the economic recovery, yet the federal government’s fiscal policy hands are tied because Congress lacks support to double down on its $787 billion dollar ante to stimulate the American economy.
America needs its large corporate businesses to help pull this economy out of the doldrums – the federal government cannot do it alone. US businesses, particularly large US corporations, are hoarding cash at record levels and borrowing huge amounts of cash created by the “easy money” monetary policy which lead to record low-interest rates in the bond markets. Rather than investing this new found cash reserves on equipment, machinery, and the hiring of workers businesses have opted sit out the economic recovery process.
The total value of all liquid assets held by non-farm non-financial US corporations is $1.84 trillion dollars, equal to 7 percent of corporate America’s total assets ($26.4 trillion dollars). That last time American companies stockpiled this much cash was in 1964, nearly 50 years ago (see, graph below).
Critics of government fiscal policy routinely claim that government gets in the way of economic progress because they crowd out private investment. Despite the fact that large US corporations are in the best position possible to help move this country forward and put millions of unemployed workers back to work, they have folded leaving the federal government alone to do all of the heavy lifting.
So, the next time you hear pundits claim the federal government, through its fiscal stimulus program, is hurting American businesses or preventing the private sector from taking the initiative ask them about the huge amounts of cash businesses were hoarding. America needs large US corporations to re-invest back into the American economy to help reduce the nation’s 9.6 unemployment rate.