U.S. Firms Accelerate Cash Hoarding in 3Q16, Likely Due to Geopolitical Uncertainty

U.S. businesses show no sign of deploying their cash any time soon, according to the latest Corporate Cash Indicators, a quarterly survey of corporate treasury and finance executives conducted by the Association for Financial Professionals.

The quarter-over-quarter index surged 11 points to +19, while the year-over-year indicator added 7 points to +21, suggesting that organizations are extremely focused on building their cash reserves.

However, the forward-looking indicator measuring expectations for increasing cash during the fourth quarter of 2016 decreased from a reading of +16 to +4, signaling that organizations are going to continue accumulating cash this fall, but at a slower pace than last quarter.

In the first three quarters of 2016, organizations indicated that they planned to accumulate cash during the respective quarter and they have done so, highlighting the cautious approach of organizations to deploying cash.

The indicator for short-term investment aggressiveness shed 4 points to a reading of -5 in the third quarter, indicating companies were leaning towards a more conservative approach with their investments. The more conservative posture being adopted could be a result of the shift from prime money funds to government funds.



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