U.S. corporations are holding record-high amounts of cash. Understanding this phenomenon, many argue, may help us tease out the reasons for the slow recovery from the Great Recession.
A close look at the balance sheets of publicly traded U.S. firms shows that their cash holdings have increased dramatically since the mid-1990s except for a slowdown around the financial crisis. The two explanations most frequently given for the growth in cash pertain to fiscal policy and structural factors.