Click to enlarge:

Source: Bloomberg

 

U.S. non-financial companies held a record $931 billion of checking and savings deposits as of March 31, according to the Federal Reserve flow-of-funds reports. Deposits more than doubled from June 2009, when the latest recession ended, as the economy grew 6.3 percent.

Its a bit of the Recency effect — Cash is rising as companies guard against the risk of another slump, with management looking back towards the 2008-09 crash.

Checking accounts held 40 percent of non-financial companies’ deposits at the end of the first quarter, and the other 60 percent was in savings. Deposit figures at the end of the second quarter will be included in the Fed’s next flow-of- funds report, due Sept. 20.

 

Source:
By David Wilson
Bloomberg
September 13, 2012

Category: Corporate Management, Credit, Economy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Business Bank-Balance Boom”

  1. DeDude says:

    I think it is as much if not more a case of companies desperately waiting for an increase in costumers so they can expand. But costumers are not showing up because they don’t have any extra income (or credit) to increase spending with.

  2. Brent_in_Aurora says:

    Wasn’t there an explicit unlimited FDIC guarantee on corporate payroll and cash accounts as a part of TARP? I seem to recall that the unlimited guarantee is supposed to end soon?

  3. limulus polyphemus says:

    log scale please

  4. Lyle says:

    Yes the guarantee ends the end of the 2012.
    As to the larger point 2008 proves that the recent efficient market idea that when you need to borrow you always can get a loan at a reasonable rate is false. As a result a CFO would look at how much would be needed to get buy with no borrowings and having to repay for say 9 months and want that much in the bank. 2008 proved the efficient market hypothesis about someone always wanting to lend money to be wrong, so CFOs have to act accordingly.

  5. denim says:

    Just shows that the companies have money on hand to give raises in pay to employees. Then said employees become customers that buy goods and services with it. Worked for Henry Ford.

  6. philipat says:

    And where is all this cash located?

  7. DiggidyDan says:

    inflation adjusted to please.

  8. sellstop says:

    Those fellas need a tax cut!

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