corporate cash
here's an article from huffpo concerning the cash that has been accumulating in corporate bank accounts....where, ironically, it does nothing for the economy....
Thing One: So Much Cash, So Little Use For It: The good news? Companies are as flush with cash as they have ever been. Now the bad news: They're not going to spend any of it, except to give it back to shareholders.
U.S. companies plan to pay a record $300 billion in dividends this year, writes the Wall Street Journal, up from $282 billion a year ago. Companies also announced plans last month to buy back nearly $118 billion in stock, the most for any single month on record, by one measure.
All of this cash flowing to investors has a couple of positive effects, besides the obvious make-investors-happy effect: For one thing, it is helping to boost stock prices through the roof, for whatever that is worth. For another thing, it will result in more tax money to the U.S. government, which I hear tell has been experiencing some agita about its budget lately. Dividends are being taxed at higher rates this year -- one effect of this year's "fiscal cliff" caused by all of that budget agita -- so more dividends equals many more tax dollars.
Of course, the government's budget woes could be alleviated a good bit if companies would stop hoarding cash overseas, away from the clutches of the IRS. U.S. companies are holding a record $1.9 trillion offshore, according to Bloomberg's count, having shipped another $183 billion overseas in the past year.
As one analyst tells the WSJ, all of this cash sloshing about is hardly a great sign. Companies are giving it back to shareholders and stashing it overseas because they can't figure out what else to do with it, as Paul Krugman notes in his New York Times column. Corporate cash may be pushing the Dow to a record high, but it is not being invested in the future, or in people. The job market is still missing more than 3 million of the jobs it lost during the recession. At the current pace of hiring, that hole could take nearly two more years to fill. And then there are wages, which have stagnated even as corporate profits have hit record highs.
It's something to keep in mind when reading today's February jobs report. The job market is recovering, but still far from healed
Thing One: So Much Cash, So Little Use For It: The good news? Companies are as flush with cash as they have ever been. Now the bad news: They're not going to spend any of it, except to give it back to shareholders.
U.S. companies plan to pay a record $300 billion in dividends this year, writes the Wall Street Journal, up from $282 billion a year ago. Companies also announced plans last month to buy back nearly $118 billion in stock, the most for any single month on record, by one measure.
All of this cash flowing to investors has a couple of positive effects, besides the obvious make-investors-happy effect: For one thing, it is helping to boost stock prices through the roof, for whatever that is worth. For another thing, it will result in more tax money to the U.S. government, which I hear tell has been experiencing some agita about its budget lately. Dividends are being taxed at higher rates this year -- one effect of this year's "fiscal cliff" caused by all of that budget agita -- so more dividends equals many more tax dollars.
Of course, the government's budget woes could be alleviated a good bit if companies would stop hoarding cash overseas, away from the clutches of the IRS. U.S. companies are holding a record $1.9 trillion offshore, according to Bloomberg's count, having shipped another $183 billion overseas in the past year.
As one analyst tells the WSJ, all of this cash sloshing about is hardly a great sign. Companies are giving it back to shareholders and stashing it overseas because they can't figure out what else to do with it, as Paul Krugman notes in his New York Times column. Corporate cash may be pushing the Dow to a record high, but it is not being invested in the future, or in people. The job market is still missing more than 3 million of the jobs it lost during the recession. At the current pace of hiring, that hole could take nearly two more years to fill. And then there are wages, which have stagnated even as corporate profits have hit record highs.
It's something to keep in mind when reading today's February jobs report. The job market is recovering, but still far from healed
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