Tickers in this Article: HPQ, PLT, FOSL, QLGC
There are many different views of the current state of the economy in the United States, but one thing that most economists and investors can agree on is that until there is employment growth, any economic recovery is likely to be a sluggish one. This lack of hiring by Corporate America is odd because levels of cash are at record highs, and many of the companies that survived the financial crisis have strengthened balance sheets through renegotiation of credit lines and the extension of the maturity of existing debt.

Unfortunately, a number of recent stock buyback announcements from major public companies indicate that companies are still reluctant to spend this cash hoard on hiring or rehiring laid off workers. This will probably restrict employment growth, and delay any economic recovery.

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Latest Repurchases
The latest stock repurchase announcement came from Hewlett Packard (NYSE:HPQ), which authorized an additional $10 billion for share repurchases. The company was already operating under an $8 billion program initiated in November 2009, of which Hewlett Packard has already spent $3.1 billion. Hewlett Packard plans to spend $3 billion during the fiscal fourth quarter on its own stock.

Smaller companies are also authorizing stock buybacks. Fossil (Nasdaq:FOSL) announced a stock repurchase program totaling up to $750 million through 2013. This is almost 25% of the total market capitalization of the company.

Plantronics (NYSE:PLT) just announced a one million share buyback plan. This follows a similar one million share buyback plan announced in June 2010. QLogic (Nasdaq:QLGC), another technology company, increased its stock buyback program by $200 million over the next two years. This brings the total authorization to $1.75 billion, or more than the company's entire market capitalization.

The combination of high cash levels, depressed stock prices and a reluctance to hire is providing some motivation for companies to increase or initiate stock buybacks. Also, public companies with low stock prices and high cash per share often become targets for activist investors; returning the cash to shareholders may help companies avoid this attention. (To learn more, see Activist Investors: A Good Or Bad Thing?) These companies are also encouraged by investors' response, which is typically to bid up stock prices after stock repurchase programs are announced.

The Bottom Line
One major component of the sluggish economic recovery in the United States is the lack of job growth, and judging by recent stock buyback announcements from a range of public companies, this isn't likely to change any time soon. (To learn more, see A Breakdown Of Stock Buybacks)

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