Latest News

Delta Weakens Spending Spree As Firms Stash More Cash

Businesses are opting to hold on to their money as spending spree hopes wane amid the quick-spreading Delta variant of COVID-19, the Wall Sreet Journal (WSJ) reported on Tuesday (Aug. 17). 

“If you’re a corporate treasurer then you’re not wanting to be complacent,” Mark Lewellen, head of corporate debt capital markets at Deutsche Bank, told WSJ. “If you look at infection rates in Europe, they’re still climbing, there’s concern around more variants. Clearly this has not gone away.”

See also: Fed: Delta Variant Might Jeopardize Economy As Americans Avoid Job Hunting

Although the economic rebound was among the most robust in history, a dark cloud is hovering over earlier optimism. Optimistic forecasts were largely powered by a combination of the dropping COVID infection rate, stimulus money, vaccinations and a global public that was eager to shop and travel. But the sweeping Delta variant has changed all of that.

See also: June Spending Up But Delta Variant Darkens Outlook

Corporate balance sheets are weighted with piles of cash and short-term investments, both in the U.S. and around the world, hitting a record-high of $6.84 trillion, per the WSJ, citing S&P Global data. 

Numbers were drawn from second-quarter earnings reports and are 45 percent higher than the average of the last five years before the pandemic and 2.6 percent higher than the first quarter, per the WSJ.

See also: May Retail Sales Fall 1.3 Pct, Muddling Outlook For Consumer-Led Recovery

Delta and other variants of COVID-19 have prompted some countries and regions to begin re-instituting restrictions that were only recently lifted — Australia, Israel and China. The U.S., too, is advising that people wear masks indoors while in high-risk areas or anywhere for people with weakened immune systems.

 

You may also like

Leave a reply

Your email address will not be published. Required fields are marked *

More in:Latest News