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Study: US firms continued to exhibit caution with cash holdings in Q3 2019

During the third quarter of 2019, US businesses continued to accumulate cash and short-term investment holdings, though at a gradual pace, according to the AFP Corporate Cash Indicators (CCI), a quarterly survey of senior corporate treasury and finance executives conducted by AFP.

The latest CCI’s quarter-over-quarter index increased one point to +9, and the year-over-year indicator increased by nine points to +20. These readings suggest that treasury and finance professionals are uncertain about the economy and exhibiting caution.

Organisations continued to build cash reserves through the summer, but at a slightly slower pace than anticipated. This group anticipates cash accumulation will continue to accelerate rapidly throughout the fourth quarter; the forward-looking indicator measuring expectations for changes in cash holdings in the current quarter increased four points to +16. This figure is one of the highest AFP has recorded for a forward-looking indicator since it began gathering this data in January 2011.

Meanwhile, the indicator for short-term investment aggressiveness decreased significantly, moving from -3 to -10, signalling a continued conservative posture with cash and short-term investments. This is the lowest this figure has been since AFP began reporting on these numbers in 2011. Recent interest rate cuts by the Federal Reserve Bank and the likelihood that there are more to come are prompting treasury and finance professionals to be conservative with their organisations’ short-term instruments.

These results are based on 120 responses from senior treasury and finance professionals this quarter.

“With trade tensions between the US and China continuing and fears of a potential recession, business leaders aren’t taking any chances,” said Jim Kaitz, president and CEO of AFP. “Organisations are understandably reluctant to spend any money that they don’t have to. Cash accumulation appears to be the new normal.”

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Cash & Liquidity Management
Cash & Liquidity Mngm in North America
Investing Short-Medium Term Surpluses
North America

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