UMass Study: Cash Hoarding Stifles Job Creation
Economic researchers at the University of Massachusetts-Amherst say excess corporate hoarding of cash and other liquid assets is preventing the creation of millions of jobs across the United States.
The Political Economy Research Institute (PERI) says banks are holding $1 trillion in excess cash while non-financial corporations are carrying $400 billion in excessive liquid assets. Together, the $1.4 trillion would generate 19 million new jobs over the next three years if it were channeled toward more productive investments, the PERI study said. The study predicts that would push the unemployment rate - now at 8.6 percent - to less than 5 percent by the end of 2014.
Non-financial corporations are holding on to $2 trillion in liquid assets while banks are carrying $1.6 trillion in cash reserves, the study said. Because of the piling up of the cash reserves, the study said, smaller, non-corporate businesses have experienced "a massive contraction" in the supply of available credit since the onset of the Great Recession in 2008, it said.
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