Corporate America sitting on $800 billion

If the financial incentive is there to sit on cash rather than hire, someone in Washington needs to think about how to turn that around and make it worth their while to start hiring again. CNBC:

The current members of the S&P; 500 are sitting on about $800 billion in cash and cash equivalents, the most ever, according to data by Birinyi Associates, even as the unemployment rate has ticked back above 9 percent. Most of this cash and cash equivalents are likely yielding at or below the current 3.6 percent annual rate of inflation, giving it a negative real return.

“Companies are still gun shy from the credit crunch,” said Dave Lutz, managing director of trading at Stifel Nicolaus. “And why hire if there is no demand? Stay variable with temporary workers.”

This ultra-conservative outlook runs contrary to what the Federal Reserve said about the economy Wednesday. In its monetary policy statement, the Fed said that it expects energy and other rising costs to abate, causing companies to hire and the economy to recover from its current soft patch.


An American in Paris, France. BA in History & Political Science from Ohio State. Provided consulting services to US software startups, launching new business overseas that have both IPO’d and sold to well-known global software companies. Currently launching a new cloud-based startup. Full bio here.

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