{"id":8828,"date":"2021-04-15T00:13:10","date_gmt":"2021-04-15T00:13:10","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2021\/04\/15\/businesses-are-sitting-on-record-130b-in-excess-cash-but-will-they-invest-it-coming-out-of-the-pandemic\/"},"modified":"2021-04-15T00:13:10","modified_gmt":"2021-04-15T00:13:10","slug":"businesses-are-sitting-on-record-130b-in-excess-cash-but-will-they-invest-it-coming-out-of-the-pandemic","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2021\/04\/15\/businesses-are-sitting-on-record-130b-in-excess-cash-but-will-they-invest-it-coming-out-of-the-pandemic\/","title":{"rendered":"Businesses are sitting on record $130B in excess cash, but will they invest it coming out of the pandemic?"},"content":{"rendered":"<p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> CIBC deputy chief economist Benjamin Tal pointed out that businesses&#8217; participation in Canada&#8217;s economic recovery could be limited by a couple of factors <\/p>\n<div class=\"article-meta\">\n<div class=\"published-by\">\n<p>Author of the article:<\/p>\n<p> <span class=\"published-by__author\">Bianca Bharti<\/span> <\/div>\n<div class=\"published-date\">\n<p>Publishing date:<\/p>\n<p> <span class=\"published-date__since\">Apr 14, 2021<\/span> \u00a0\u2022\u00a0 <span class=\"updated-date__since\">37\u00a0minutes ago<\/span> \u00a0\u2022\u00a0 <span class=\"published-date__word-count\">2 minute read<\/span> \u00a0\u2022\u00a0 <span>  <span class=\"comment-bubble\"> <svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" height=\"16px\" viewbox=\"0 0 24 24\" width=\"16px\"><path d=\"M4,0 C2.93914,0 1.921718,0.421428 1.171572,1.171572 C0.421428,1.921718 0,2.93914 0,4 L0,24 L3.846,20.158 L4,20.16 L20,20.16 C21.0608,20.16 22.0782,19.73858 22.8284,18.98842 C23.5786,18.23828 24,17.22086 24,16.16 L24,4 C24,2.93914 23.5786,1.921718 22.8284,1.171572 C22.0782,0.421428 21.0608,0 20,0 L4,0 Z M2,4 C2,3.46956 2.21072,2.96086 2.58578,2.58578 C2.96086,2.21072 3.46956,2 4,2 L20,2 C20.5304,2 21.0392,2.21072 21.4142,2.58578 C21.7892,2.96086 22,3.46956 22,4 L22,16.16 C22,16.69044 21.7892,17.19914 21.4142,17.57422 C21.0392,17.94928 20.5304,18.16 20,18.16 L4,18.16 L3.048,18.126 L2,19.174 L2,4 Z\"\/><\/svg><\/span> Join the conversation  <\/span> <\/div><\/div>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio featured-image-category__economy\"><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=564&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=1128&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 1200px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=564&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=1128&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=472&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=944&amp;type=webp 2x\" type=\"image\/webp\"\/><source media=\"(min-width: 768px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=472&amp;type=jpg,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=944&amp;type=jpg 2x\" type=\"image\/jpeg\"\/><source media=\"(max-width: 767px)\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=288&amp;type=webp,&#10;            https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/04\/businesses-1.png?quality=90&amp;strip=all&amp;w=576&amp;type=webp 2x\" type=\"image\/webp\"\/><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">&#8220;The question is whether or not this money will be spent to reverse the decline in business investment.&#8221;<\/span> <span class=\"credit\">Photo by Gavin Young\/Postmedia<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Canadian businesses are sitting on a record cash pile, but whether and how they spend it may determine the shape of the post-pandemic recovery, according to a recent report from the Canadian Imperial Bank of Commerce.<\/p>\n<p>In the report, CIBC deputy chief economist Benjamin Tal estimated that businesses are currently sitting on $130 billion in excess cash, a level \u201cabove and beyond\u201d what would have been the case without the pandemic.<\/p>\n<p>The report followed the bank\u2019s November estimate that Canadian households \u2014 made frugal by lockdowns and layoffs \u2014 had accumulated more than $90 billion, in no small part thanks to federal aid programs.<\/p>\n<p>\u201cWe know (households) are going to spend part of it and that is one of the reasons we expect a very strong recovery,\u201d Tal told the Financial Post in an interview. Households are expected to lead a seven-per-cent annualized rate of growth in second half of the year, according to the report.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-1\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cNow we look at businesses and we found that they sit on even more excess cash. So the question is whether or not this money will be spent to reverse the decline in business investment.\u201d<\/p>\n<p>Tal pointed out that businesses\u2019 participation in Canada\u2019s economic recovery could be limited by a couple of factors.<\/p>\n<section aria-labelledby=\"moreTopicLabel3598593660452523017695417008884821\" class=\"more-topic\" data-carousel-icon-button=\"\" data-carousel-type=\"list\"><button aria-hidden=\"true\" class=\"more-topic__button-prev\" data-carousel-prev=\"\" tabindex=\"-1\" title=\"previous\" type=\"button\"\/><\/p>\n<ol class=\"more-topic__items list-unstyled\" data-carousel-slide-list=\"\" tabindex=\"0\">\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"None\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/nationalpost\/wp-content\/uploads\/2020\/11\/vw1117money.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/nationalpost\/wp-content\/uploads\/2020\/11\/vw1117money.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/nationalpost\/wp-content\/uploads\/2020\/11\/vw1117money.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/nationalpost\/wp-content\/uploads\/2020\/11\/vw1117money.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Canadian households and businesses sitting on $170 billion excess cash hoard: CIBC <\/span><\/h3>\n<\/li>\n<li class=\"more-topic__item\" data-carousel-item=\"\"><picture class=\"more-topic__item-image\"><img decoding=\"async\" alt=\"A business in Toronto posts a sign CEBA Won\u2019t Help Us. Just over half of all businesses told StatsCan they did not know how long they could keep operating at their current level of revenue and expenses before considering bankruptcy or closing.&#10;&#10;\" class=\"lazyload\" src=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/ceba0305.jpg?h=96&amp;strip=all&amp;quality=80\" height=\"96\" loading=\"lazy\" srcset=\"https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/ceba0305.jpg?h=96&amp;strip=all&amp;quality=80,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/ceba0305.jpg?h=192&amp;strip=all&amp;quality=80 2x,&#10;                                    https:\/\/smartcdn.prod.postmedia.digital\/financialpost\/wp-content\/uploads\/2021\/03\/ceba0305.jpg?h=288&amp;strip=all&amp;quality=80 3x\" width=\"96\"\/><\/picture>\n<h3 class=\"more-topic__item-text\"><span class=\"more-topic__item-text-clamp\"> Canadian businesses still worry about survival even as the pandemic&#8217;s end draws closer <\/span><\/h3>\n<\/li>\n<\/ol>\n<p><button aria-hidden=\"true\" class=\"more-topic__button-next\" data-carousel-next=\"\" tabindex=\"-1\" title=\"next\" type=\"button\"\/><\/section>\n<p>One major inhibitor to business investment is the federal government\u2019s Canadian Emergency Business Account program, which provides interest-free loans of up to $40,000 and recently expanded to $60,000. More than 500,000 Canadian businesses have received CEBA support so far, which totals more than $46 billion.<\/p>\n<p>Most of that money will have to be paid back, Tal said, save for $20,000 which will be considered a grant if a businesses pays the rest of the loan back by December next year.<\/p>\n<p>The second inhibitor lies in which sectors performed well during the pandemic.<\/p>\n<p>\u201cThose sectors that were benefitting from the crisis, they don\u2019t really show any significant increase in business investment intentions,\u201d Tal said.<\/p>\n<p>Technology companies and manufacturers, for example, are reluctant to invest more than normal because they anticipate their demand to go down once life returns to normal.<\/p>\n<p>At the same time, sectors that suffered during the pandemic \u2014 such as oil and gas \u2014 have indicated a need to invest even though their cash reserves plummeted.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>\u201cIt\u2019s really consistent with the narrative of this crisis, which I (describe) as deep but narrow,\u201d Tal said.<\/p>\n<p>By deep but narrow, he means the impact for sectors is \u201cvery deep\u201d for those that experienced losses, but also narrow and limited to a few sectors compared to any other recession.<\/p>\n<p>Mostafa Askari, chief economist at the\u00a0Institute of Fiscal Studies and Democracy, said once macroeconomic conditions normalize, business investment will pick up. However, until then, consumers will lead the recovery because their desire to spend has been mounting over the course of numerous lockdowns.<\/p>\n<p>\u201cThere has to be a view that the economy is going to grow at a healthy pace, that the COVID impact is gone and global conditions are going back to normal,\u201d he said. \u201cAll those effects will encourage businesses to increase their investment.\u201d<\/p>\n<\/section>\n<section class=\"article-content__share-group article-delimiter\" data-evt=\"beforeunload\" data-evt-typ=\"scroll-depth\" data-evt-val=\"{\" control_fields=\"\" of=\"\" page=\"\" viewed=\"\" story=\"\">\n<h2 class=\"visually-hidden\">Share this article in your social network<\/h2>\n<\/section>\n<div class=\"article-content__ad-group\">\n<div class=\"ad__section-border ad__section-border--category visually-hidden\">\n<section class=\"ad\">\n<h2 class=\"visually-hidden\">Advertisement<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-acceptable\">\n<div class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div>\n<\/section>\n<\/div><\/div>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot1\">\n<section aria-labelledby=\"TheLogic2757045633688983280121351157674168\" class=\"feed-section feed-section--partner-story list-widget--partner-story the-logic\" data-async=\"\">\n<div class=\"widget-title widget-title--partner-story flex-align-center row row--no-padding--left row--no-padding--right\">\n<p> In-depth reporting on the innovation economy from The Logic, brought to you in partnership with the Financial Post. <\/p>\n<\/p><\/div>\n<\/section>\n<\/div>\n<div class=\"widget article-content__widget-group article-content__widget-group--slot2\">\n<section aria-labelledby=\"TopStoriesNewsletter498993652156876751309862867377963\" class=\"newsletter-widget\" data-account-id=\"b9d3df2fccd108b5eff3c44f573b2cd6\" data-target-list=\"FP_HeadlineNews\" data-widget=\"newsletter\">\n<div class=\"newsletter-widget__body\">\n<h2 id=\"TopStoriesNewsletter498993652156876751309862867377963\">Top Stories Newsletter<\/h2>\n<p class=\"newsletter-widget__text\">Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.<\/p>\n<div aria-hidden=\"false\" class=\"newsletter-widget__bottom js-form-main\">  <small> By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. 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Visit our Community Guidelines for more information and details on how to adjust your email settings. <\/p>\n<\/section>\n<\/footer>\n<\/div>\n\n<br \/>Businesses are sitting on record $130B in excess cash, but will they invest it coming out of the pandemic?<\/a><br \/>\n<br \/>2021-04-15 00:13:10<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Breadcrumb Trail Links News Economy CIBC deputy chief economist Benjamin Tal pointed out that businesses&#8217; participation in Canada&#8217;s economic recovery could be limited by a couple of factors Author of&#8230;<\/p>\n","protected":false},"author":2,"featured_media":8829,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[31],"tags":[],"class_list":{"0":"post-8828","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy"},"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/8828","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=8828"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/8828\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media\/8829"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=8828"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=8828"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=8828"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}