Chart of the Decade: Corporations are Pessimistic About Future Growth

Fight disinformation: Sign up for the free Mother Jones Daily newsletter and follow the news that matters.


Ezra Klein posted this chart today showing the steady accumulation of corporate cash and reserves over the past 15 years. I’d like to nominate it for chart of the decade or something. “Why corporations are holding so much more cash is an interesting mystery,” says Ezra, but I think it’s the key mystery of the past couple of decades. Total liquid assets held by nonfinancial corporations have increased from 7.7 percent of GDP to 11.3 percent of GDP.

Why? Why are corporations increasingly unable to find anything interesting to do with their cash in the real world? Why are they implicitly so pessimistic about opportunities for future growth? Is this the financial smoking gun for Tyler Cowen’s “great stagnation” thesis?

I’m not sure. But for 15 years the people with money to bet have been betting that they’ll get better returns investing in financial instruments than they will by investing in expansion of existing products and the invention of new ones. Until we figure out why, we’re going to be stuck with a combination of sluggish growth and financial bubbles as far as the eye can see.

Fact:

Mother Jones was founded as a nonprofit in 1976 because we knew corporations and billionaires wouldn't fund the type of hard-hitting journalism we set out to do.

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2024 demands.

payment methods

Fact:

Today, reader support makes up about two-thirds of our budget, allows us to dig deep on stories that matter, and lets us keep our reporting free for everyone. If you value what you get from Mother Jones, please join us with a tax-deductible donation today so we can keep on doing the type of journalism 2024 demands.

payment methods

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate