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Illustration: Aïda Amer/Axios

Despite historically low interest rates, U.S. companies are being unusually frugal, holding back on issuing new debt and pumping up their balance sheets with cash.

Why it matters: Historically, when interest rates are low and the economy is strong, companies have levered up to increase capital expenditures and buy assets in order to expand. The opposite is happening now.

  • In the short term, that means the country is less at risk for economic collapse, but it also shows that American businesses are investing less in the future.

What they're saying: "That is highly unusual, as being late cycle this is precisely when companies are supposed to lever up," credit strategists at Bank of America Global Research said in a recent note.

By the numbers: Net debt declined on a year-over-year basis in the fourth quarter of 2019 for the first time in nearly a decade, Bank of America's data show, meaning companies are issuing less new debt and reducing current obligations at an uncommon rate.

  • 25% of companies reduced their debt levels in 2019 by at least 7.8%.
  • Those numbers are rarely seen during economic booms, BofA strategists note, and are much more akin to "what we see on a more forced basis during and in the aftermath of recessions."

What's happening: Despite increased profits from the Tax Cuts and Jobs Act, CEOs and company leaders have told Axios the uncertainty of the U.S.-China trade war and fears of an imminent recession discouraged big-ticket spending during 2019.

  • Rather than use their tax savings for investment or expansion, they largely socked it away.
  • Data from accounting firm PwC shows company cash holdings rose to $2.4 trillion, the highest amount in decades, a company spokesperson said.

The intrigue: It's not just net debt: Companies have added very little gross debt, dating back to the second quarter of 2017, BofA's data show, the continuation of a "remarkable development."

  • "As we have argued, it is indeed different this time."

Between the lines: Investment grade companies that would be in the best position to issue very cheap debt to finance investment projects or mergers are pulling back in part because they spent so much between 2014-2017 pursuing large-scale M&A.

  • The data show that most companies are improving their fundamentals, but most are BBB-rated, the lowest end of the IG scale.

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Actor Matthew McConaughey’s nine-point lead in a theoretical matchup against Greg Abbott shows just how vulnerable the hard-right Texas governor could be in a general election.

Why it matters: Abbott has won conservative accolades for his abortion, mask and vaccine bans. Axios reported Sunday that former Rep. Beto O’Rourke is preparing to announce a gubernatorial challenge — but a recent poll shows he’s not even the most popular Democrat in the state.

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Why it matters: Candidates are unsure if the district they're targeting will remain intact or be reshaped by the process. The uncertainty is especially vexing to Democrats, who are vying to maintain their narrow margin in the House.

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Illustration: Aïda Amer/Axios

Conservative groups are unveiling huge ad-buys going after vulnerable House Democrats over tax increases and other revenue measures in their party's massive infrastructure spending bill, Axios has learned.

Why it matters: President Biden and Democrats have an immense amount of political capital riding on a $3.5 trillion bill facing razor-thin margins in both chambers. Conservatives are running ads targeting the House members who leaders will need to pass the measure.