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.