Many of their businesses having enjoyed record levels of both earnings and cash
One of the oddities of the depressed economic environment of the last five years — in the wake of the financial crisis of 2007-2008 and the European meltdown — is that many American companies have reported extraordinarily high levels of earnings and cash. As a result, cash levels on corporate balance sheets are at all time highs. This is in sharp contrast to the moods of both management and shareholders.
One hypothesis is that we are seeing a long-delayed payoff of productivity improvements from the new generation of information technology, specifically PCs and the Internet. Fearful companies under revenue pressure are using technology to improve efficiency and reduce headcount, thereby expanding margins. This is simultaneously good for consumers and bad for employment levels.
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