Cash Piles Up as U.S. CEOs Play Safe With Slow-Growth Economy [View all]

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http://www.bloomberg.com/news/2013-05-23/cash-piles-up-as-u-s-ceos-play-safe-with-slow-growth-economy.html


The cash is piling up at home in part as companies such as General Electric Co. and chemical maker PPG Industries Inc. sell assets and Caterpillar Inc. cuts capital spending. Jeffrey Immelt, chairman and chief executive officer of General Electric Co.




Any lament that U.S. executives are sitting on a record $1.73 trillion at their companies instead of investing in plants and equipment may be about to get louder.

The buildup of cash and marketable securities accelerated in the first quarter on a year-over-year basis after slowing in early 2012. At the same time, capital spending in the most recent quarter rose by the least since March 2010, when the U.S. was still emerging from a financial crisis.

The trends, based on data from about 2,300 U.S. companies compiled by Bloomberg, suggest executives’ lack of need or confidence to invest deepened with threats of federal spending cuts and the economic slowdowns at home, in Europe and China. Without a pickup in spending, the U.S. economy loses a driver of job creation and risks staying locked in below-average growth, giving even more cause to hold tight.

“What concerns me is that companies have all of this excess cash and they are not deploying it into their long-term operations,” said Nick Raich, chief executive officer of the Earnings Scout, an independent economic research firm based in Cleveland. “Public outcry will erupt if companies do not spend and create jobs.”