Thursday, March 10, 2011; 6:21 PM
Stocks lift household wealth; companies amass cash
WASHINGTON (AP) - Americans are spending more of their growing wealth. The economy still needs companies to do the same.
Still lacking the confidence to spend at normal levels, businesses have stockpiled nearly $1.9 trillion in cash, a record, the government said Thursday. Cash now accounts for 13 percent of corporate assets, the highest share since 1984. Economists say the surest way to reduce unemployment would be for companies to spend more of that cash to expand and hire.
The same report, based on data from the last three months of last year, showed households are further rebuilding the wealth they lost in the recession. Americans' net worth grew 3.8 percent, mostly thanks to the rising stock market.
Greater household wealth generally leads Americans to spend more. They increased their spending in the October-December quarter at the fastest pace since 2006. Household net worth came to $56.8 trillion at the end of 2010, even though the value of real-estate holdings fell 1.6 percent, according to the Fed. Last quarter's gain was faster than the 2.6 percent gain in the previous quarter.
But companies are still waiting for signs that the economy and their own businesses are strengthening enough to justify spending aggressively again.
Higher oil prices threaten global economy
WASHINGTON (AP) - Higher oil prices are slowing global economic growth, and the impact is likely to spread in coming months.
Oil prices helped raise the U.S. trade deficit to a seven-month high in January, when crude prices were $87.50 a barrel. Oil is now trading at more than $100 a barrel, suggesting the gap will widen in coming months. Even fast-growing China isn't immune - higher oil prices contributed to a rare trade deficit there in February.
Pricier oil dampens consumer spending and that cuts into economic growth. Surging oil prices can also stir up inflation fears, triggering higher interest rates that cut into household and business spending.