No double-dip risk, just more of the slow recovery blues

The message of this chart of announced corporate layoffs is that there is no sign of any deterioration in the job market. Indeed, layoff activity remains unusually low. Large corporations long ago finished their restructuring activities. We've already seen a pickup in new hiring activity, but to date it has been fairly modest.

Although new hiring activity has increased only modestly, conditions today are still far better than they were one and two years ago. In the very large service sector, businesses' new hiring intentions are in positive territory (second chart), but far from what might be termed robust. So while bad news has slowed to a trickle, we are still waiting for the really good news.

In my view, we aren't likely to see any real strength in the U.S. economy until such time as the federal government makes a determined effort to cut back on its spending addiction, simplify the tax code, reduce and flatten tax rates, and ease up on the regulatory pressure. Massive federal borrowing leaves no room for private sector initiative, corporate tax rates are the highest in the industrialized world, and the tax code's complexity is beyond comprehension. As I've mentioned before, the federal budget deficit has absorbed every dime of corporate profits since the recovery began two years ago.

I still think this is possible, and mainly because there really is no alternative. We've had our great experiment with Big Government and it has failed. Time now to give the private sector a chance.