Why that corporate cash pile isn't so impressive

November 17, 2011 - 12:45 PM
Corporate Debt

FILE - In this May 16, 2011 file photo, the Wal-Mart logo is displayed in Springfield, Ill. Since the start of the recession in Dec. 2007, S&P 500 companies have borrowed an additional 40 cents for every dollar they've hoarded in cash. For many companies, debt has risen more than cash. Drugmaker Pfizer added $3.5 billion to cash from the start of the recession through June. But it added $28 billion of debt, according to FactSet. PepsiCo added $22 billion more debt than cash. Hewlett-Packard added $16 billion more, Wal-Mart $6.5 billion. (AP Photo/Seth Perlman, File)

NEW YORK (AP) — Hardly a day goes by without a politician or pundit pointing out that companies are hoarding cash — roughly $3 trillion — and that they could help the economy if only they'd spend it.

But companies have piled up even more debt lately than they have cash. Financial experts say it makes companies more vulnerable than they look.

Former U.S. budget director David Stockman says, "The record cash story is bull market baloney."

The debt owed by companies amounts to 83 percent of the goods and services they produce. That's lower than during the recession. But before that, you have to go back at least six decades to find such a heavy debt load.