Good news on the economic front

Amid the drumbeat of negatives on the economy, the New York Times reports that Companies Are Piling Up Cash. The trend started several years ago:

The increase over the last decade in the amount of cash, as a percent of total assets, for the companies in the Standard & Poor’s 500-stock index has been steep. One study shows that the average cash ratio doubled from 1998 to 2004 and the median ratio more than tripled, while debt levels fell. According to S.& P., the total cash held by companies in its industrial index exceeded $600 billion in February, up from about $203 billion in 1998.

It isn't just the biggest firms that are saving money:

The Stulz team’s study showed that this trend of rising cash ratios was not limited to very large corporations — indeed, the average increase is more pronounced among firms below the top one-fifth of the sample.

Over the same time, the study found, one measure of corporate debt — the net debt ratio, or debt minus cash as a percent of total assets — fell so sharply that, by 2004, it was below zero, where it stayed at least through 2006.

“In other words,” the researchers noted, “on average, firms could have paid off their debt with their cash holdings.”

A good counterweight to the over-indebted consumer sector.