U.S. corporations are sitting on a huge and growing pile of cash. It just crossed the $2 trillion threshold, according to new Fed data.
This buildup is often explained as a response to the financial crisis and the recession. If a company thinks the wheels might come off the economy next week (or next month, or next year), it makes sense to keep a lot of cash in the bank, rather than rush out to build new factories and hire more workers.
But if you take a longer view, it’s clear that there’s more to the story than that. Companies’ cash holdings have been growing for decades, in both absolute and relative terms
Jegarakshagan R. Gokul