Your Cash Hoarding Data Point of the Day

From WSJ:

U.S. companies continued to hoard cash in the third quarter, while households pared back borrowing, according to a Federal Reserve report.

U.S. nonfinancial companies had $1.93 trillion stashed in cash and short-term assets at the end of the third quarter—7.4% of total assets—up from $1.8 trillion, or 6.9% of total assets. That’s the highest level in more than 50 years.

The total debt in the U.S. nonfinancial sectors grew 4.2% in the third quarter, boosted by increased government and business debt.

Household debt, however, fell by 1.7%, the 10th straight quarterly decline, the Fed on Thursday said in its “Flow of Funds” data. Home mortgage debt dropped, as did consumer credit. Another Fed report this week showed credit-card use by U.S. consumers tumbled a 26th straight time in October, as Americans keep working to clean up their balance sheets amid high joblessness that’s restraining the economic recovery.

Though consumers avoided taking on new debt, the report showed the net worth of Americans rose last summer on a rebound in stock-market prices.

U.S. households’ total net worth rose 2.2% during July through September, to $54.89 trillion.

Net worth represents total assets such as homes and stock portfolios, minus liabilities like mortgages and credit card debt. Rising stock market assets offset declines in real estate holdings in the third quarter, the Fed report showed. Stock market wealth had fallen in the second quarter, contributing to a decline in total net worth during those three months.

The “Flow of Funds” said household net worth rose to about 4.81 times disposable personal income in the third quarter from about 4.72 times income in the second quarter.

Posted by Eddy Elfenbein on December 9th, 2010 at 1:30 pm

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