Corporate cash in the US remains at historic levels. Aided by several of the Federal Reserve’s monetary policies, that trend continued its historical pattern in the first quarter of 2012, according to Treasury Strategies, the leading treasury and liquidity consulting firm. The Federal Reserve recently reported that corporate cash balances continued to grow last quarter to $2.23 trillion – an $845 billion increase since Q1 2009.

“The explosive growth in corporate cash can be attributed to monetary policies including Quantitative Easing, which pumped nearly $900 billion into the market, and Operation Twist, which lowered the cost of long-term borrowing thus encouraging companies to borrow,” says Mike Gallanis, a partner of Treasury Strategies.

“In our quarterly conversations with hundreds of corporate treasurers, we hear about the key factors behind changes in cash levels,” says Gallanis.

Three early-stage positive trends Gallanis notes:

  1. Over the last year, the number of our clients using their cash for capital expenditures is solidly up.
  2. In the same period, significantly more clients say they are using cash for acquisitions.
  3. We see fewer companies with cash declining due to negative operating cash flow.

“The trends involving capital expenditures and acquisitions clearly demonstrate corporations are beginning to look beyond the recession. The decline in negative cash flow from operations shows many firms that were previously bleeding cash have repositioned themselves for profitable operations,” says Chrystal Pozin, a managing director of Treasury Strategies.

But, the question remains, where will growth come from? How has our economy evolved in the past five years? Which industries are shrinking or growing through these challenging economic times?

These are some of the questions that the Council of Economic Advisors (CEA) delves into each February in the “Economic Report of the President” (ERP).

This year, the CEA worked with LinkedIn to glean further insights into industry trends both during the recent recession and after its end in June 2009. With the data and methodology in hand, LinkedIn calculated the growth rates in industry size between 2007 and 2011 and surmised the following:

The fastest-growing industries include renewables (+49.2 per cent), internet (+24.6 per cent), online publishing (+24.3 per cent), and e-learning (+15.9 per cent). Fastest-shrinking industries were newspapers (-28.4 per cent), retail (-15.5 per cent), building materials (-14.2 per cent), and automotive (-12.8 per cent).

Instead of the growth in percentage terms, we also examined the volume of job gain/loss by industry, as indicated by the largest bubbles in the figure above. Our data shows that even through the recession, the industries with the largest volume of employment growth were internet, hospitals & healthcare, health, wellness & fitness, oil & energy, IT and renewables.

On the other side of the story, retail, construction, telecommunications, banking, and automotive had the largest volume of job losses between 2007 and 2011.

Some of the most interesting insights came from looking at how the size of industries change as a country enters and emerges from a recession.

In terms of post-recession recovery, IT, marketing & advertising, computer software, and insurance are the largest industries that fell heading towards the end of the recession in 2009 but in 2011 are at or above their 2007 employment level. Financial services is starting its recovery and real estate appears to have bottomed out.

Several industries such as newspapers, supermarkets and telecom have continued to shrink throughout the sample period.

For advice you can trust book a complimentary first appointment with Switzer Financial Planning today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.