All this money could be potential demand if companies invested it. The company I work for is sitting on a pile of cash while at the same time seeing a downtrend in revenue, buying back shares and paying out dividends. In theory the company should be investing this money in building future products, but it's not.
It's a combination of many factors. CEOs and management aren't motivated to invest in the long term of companies. A lot of big companies are structured so it is very difficult for them to apply capital in a way that facilitates growth. They are risk averse. This is esp. true when there is an air of global economic uncertainty like we've had over the last decade or so. This produces motivation to have a large capital safety buffer (because e.g. if you don't have capital you wouldn't be able to borrow it). In turn this compounds the problem. We are in a low inflation environment so you can sit on your money without losing much value. Tax considerations force capital to remain where it can't effectively be used so US companies don't bring their cash back to spend in the US because they are trying to save the tax.
Individuals are also very cautious because of economic uncertainty. If I look at myself I find myself spending less and trying to save more. I don't buy things I don't really need. If I felt more secure I might spend more money.
It's a combination of many factors. CEOs and management aren't motivated to invest in the long term of companies. A lot of big companies are structured so it is very difficult for them to apply capital in a way that facilitates growth. They are risk averse. This is esp. true when there is an air of global economic uncertainty like we've had over the last decade or so. This produces motivation to have a large capital safety buffer (because e.g. if you don't have capital you wouldn't be able to borrow it). In turn this compounds the problem. We are in a low inflation environment so you can sit on your money without losing much value. Tax considerations force capital to remain where it can't effectively be used so US companies don't bring their cash back to spend in the US because they are trying to save the tax.
Individuals are also very cautious because of economic uncertainty. If I look at myself I find myself spending less and trying to save more. I don't buy things I don't really need. If I felt more secure I might spend more money.