The huge amount of cash sitting on corporate balance sheets has fueled debate since the credit crisis. The extent of companies’ cash holdings has been cited as proof that companies weren’t doing enough to get the economy going, that they were handicapped by excessive regulation or that they preferred to hoard money overseas rather than pay taxes to repatriate the it. But last week, the latest quarterly data from the Federal Reserve suggested that noteworthy build-up in companies’ cash holdings might not have occurred.
According to the Fed’s flow of funds data, U.S. nonfinancial corporations had $1.74 trillion in cash at the end of the first quarter, up from $1.72 trillion at the end of 2011. But that year-end total was revised down from the $2.2 trillion the Fed reported originally—a change of $497 trillion.