What do America’s banks know about the state of the U.S. economy that has them hoarding ultra-safe bonds?

Growth is on a tear, hiring is the strongest in decades and households are the most upbeat since 2011. Yet banks such as Bank of America Corp. keep plowing their burgeoning deposits into U.S. government and related debt -- pushing the industry’s holdings past $2 trillion -- instead of lending it all out.

Part of the buildup has to do with rules that require banks to hold more high-quality assets in the wake of the worst financial crisis since the Great Depression. But it also reflects how borrowers, particularly among Americans scarred by the housing bust, are still repairing their finances rather than going into debt to splurge on big-ticket items. And that may mean the U.S. recovery isn’t quite as robust as all the upbeat data would suggest.

“Banks have so much cash,” said Peter Tchir, the New York-based head of macro strategy at Brean Capital. “Lending has loosened, but it is still just simpler for banks to own Treasuries.”

While the buying may help to contain any jump in Treasury yields as the Federal Reserve moves toward raising interest rates, what it says about loan demand also has implications for how soon benchmark borrowing costs will rise this year.

Minutes from the Fed’s January meeting released last week said than many policy makers were in favor of keeping rates lower for longer to avoid jeopardizing the recovery.

Profit Motive

Yields on five-year U.S. notes, which dropped as low as 1.15 percent last month, have since climbed as job and wage gains boosted the outlook for U.S. growth. The yield was 1.55 percent as of 11:15 a.m. in New York.

Investing in government bonds is proving to be a profitable move for banks. They’re making over a full percentage point more by purchasing five-year Treasuries instead of leaving the idle cash parked at the Fed, where they earn only 0.25 percent. U.S. commercial banks held $2.83 trillion in cash as of Feb. 11, versus $2.57 trillion at the end of last year.

Having cash invested in five-year Treasuries is also netting banks an attractive spread over what they are paying depositors. The yield advantage for the notes over the average deposit rate for the four largest U.S. banks is above the norm over the past decade.