Despite having cash on hand, corporations aren’t spending and bank aren’t lending. The latest report from the Federal Reserve puts big banks’ cash reserves at just under $1.6 trillion—80 times the $20 billion they held in reserve in 2007. A study by the Political Economy Research Institute found that if banks and non-financial institutions moved some of their reserves into productive investments the boost to the economy could create about 19 million jobs over the next three years and put unemployment under 5%. Economists theorize corporate execs are holding back because they don’t see opportunities for profit. Another theory is that execs are waiting until after President Obama leaves office. “I think the corporations are sabotaging the economy by not coming out in favor of policies that would help them make the investments that they want to make,” said Heather Boushey, senior economist with the Center for American Progress.
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