After crisis, companies hoard cash

WASHINGTON – US companies, still reeling from a deep economic recession, are hoarding more cash than at any time in the past 40 years, The Wall Street Journal reported yesterday.

The newspaper said in its analysis of corporate filings that in the second quarter, the 500 largest non-financial US firms held about US$994 billion in cash and short-term investments, or 9,8 per cent of their assets.The figure was up from US$846 billion, or 7,9 per cent of assets, a year earlier, the report said.The trend appears to have continued in the third quarter, despite an improving economy, The Journal noted.Of those 500 companies, 248 have reported third-quarter results. Their cash increased to 11,1 per cent of assets, from 10,1 per cent in the second quarter.Companies as diverse as Alcoa Inc., Google Inc., PepsiCo Inc. and Texas Instruments Inc. all reported big third-quarter increases in cash holdings, the paper noted.’Everyone is hoarding cash,’ The Journal quotes Carsten Stendevad, head of Citigroup Inc.’s financial-strategy group, as saying.Large cash balances are both a curse for the economy and a potential blessing, the paper said. Hoarding means companies are spending and investing less, damping economic growth. But that leaves them with more cash to deploy as the economy improves, giving them a freer hand to acquire and to restart hiring and capital spending. – Nampa/AFP