I do not watch reality TV. Honestly. Not even American Idol, America’s Top Model or The Dog Whisperer. But because so many other people do, I hear conversations about these shows all the time. One of them, Hoarders, really caught my attention.
No, I am not a hoarder (because owning more than 10 pairs of black heels does not make me a hoarder, it makes me fashionable). But US companies are definitely hoarders. That’s right Corporate America, I am pointing the finger at you and saying: “You are a hoarder, and you need an intervention!”
Now, I am not being judgmental – the facts are the facts: the Federal Reserve’s “Flow of Funds” report says U.S. non-financial companies are sitting on roughly $2 trillion in cash and other liquid assets. Cash accounted for 7.4% of the companies' total assets – the largest share since 1959.
Another report from Federal Reserve Bank of Cleveland found that fixed investment by corporations over the past several months had been growing at 4.4 percent, lower than one would expect after a deep recession. In other words, companies are hoarding cash!
If these companies were on the reality TV show Hoarders, they would undergo a psychological analysis. So, let’s pretend I have those credentials. Here’s my analysis: US companies are still traumatized from the credit crisis.
By and large, their balance sheets have recovered. But the executives who run these companies have yet to work through the pain and confusion the credit crunch brought on. It’s still too fresh in their minds – especially for companies that had debt maturities or those that needed to access credit lines to keep their businesses moving forward.
US companies have the money to hire new employees, to lease more real estate, to conduct research and development and to do a bunch of other things. They’re just choosing not to do so.
It’s the classic situation: they have the means, but not the desire. And that lack of desire hurts the overall economy and results in the much-discussed jobless recovery.
I’ve been told that the hoarders on the TV show can’t let go of their stuff until they let go of their fear and come to the realization that hoarding hurts them in many different ways, preventing them from leading happy, healthy lives.
How can US companies let go of their fear and realize that their hoarding not only hurts them but also the rest of the country? Is it time for some group therapy?
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