Companies Are Borrowing, But They're Not Investing It Or Hiring Anyone

Borrowing

Hoping for business investment to drive new hiring and investment in capital equipment? Keep waiting.

Despite corporate worldwide borrowing of $2.3 trillion in the first three quarters of 2009, the most ever, only 10% plan to use this new capital for expansion.

In the U.S., the figure is 12%, shown to the right.

Acquisitions don’t rank highly either as a reason for new capital.

Mostly, vast amounts of debt is being raised to shore up balance sheets, even for non-financial companies, or to just hoard cash in case tougher times, or better opportunities, are ahead.

The good news – capital is available (for the largest companies at least) and companies are being careful about their spending decisions. The bad news – this capital won’t be stimulating growth for some time to come.

Read more at Real Time Economics.

NOW WATCH: Money & Markets videos

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.