Economics 101 tells us there are basically two things you can do with your money: Spend it and enjoy the benefits of your new purchases today, or invest it — with the hope that you’ll make more money in the future. This basic trade-off between consumption and investment applies to companies as well. Over the past decade, the balance in corporate America has swung toward consumption, raising concerns about the U.S.’s future economic growth.
Let me explain what “consumption” means in a company’s case. Rather than saving its money to grow the business, the company gives back whatever money it has made in profits to its owners, or shareholders.
via Corporate America Is Enriching Shareholders at the Expense of the Economy | FiveThirtyEight.