But all the blood already has been squeezed out of this ever-hardening rock. We are now seeing indications that, except for military outlays, capital expenditures are still lagging.
The big banks that enjoyed public bailouts are now recovering, but they are still hoarding too much cash. The result is a cutoff of capital flow. At some point, there will be an end to the benefits corporations have enjoyed from their rounds of cost-savings.
What this likely means is that in 2012, unemployment likely will stay above 8 percent. And that number won't include all those who have given up looking for a job. Some economic demographic groups may see overall job gains, especially the college-educated and women.
But even as they and maybe some others start to climb out of the misery of the past few years, corporations probably won't be able to keep pulling the white rabbits of continuing profits gains out of their hats. Profits will level off as quarters are compared to quarters a year previous. Fear and reflexive stinginess will again grip corporations and banks, and they will keep on with their boycotts of expansion. That could kick the economy back into another tailspin.
What to do? We could start by not taxing at high rates those who create jobs. The best temporary solution would be to eliminate capital gains taxes, or at least cut them drastically. That would free up capital and thus motivate corporations to use the new capital to expand their businesses and employ more people. Perhaps the only companies to get this tax break should be those that use the savings to expand.
Just a thought.