The fact that companies are sitting on so much cash helps explain why the recovery has been so jobless so far. Corporations are trying to ramp up through increased productivity and by shedding off excess capacity. They've also been trying to avoid indebtedness and creating leaner operations.
All that cash sitting on the sidelines represents a tremendous source of possibility for the economy. If the S&P 500 companies spent only the amount of cash they've accumulated in the past year, it would be a greater investment in the economy than the entire spending portion of Obama's stimulus plan. The nation has an awful lot of latent capability, which is one reason to believe that we will regain our full financial strength one of these days.