CEO © Photodisc, Getty Images

CEOs have been AWOL in this recovery. And it's about time we called them on it.

The Fed has poured money in. So has Washington. Money is as cheap as it's ever been. Consumer confidence is soaring. Housing has stabilized. The budget battles in Washington have quieted.

But through all the economic ups and downs and sometimes-debatable efforts, one big thing has been missing. That is CEOs willing to take chances, start new ventures and hire people. And that's why the recovery, on real-world measures such as jobs and wages, has been so disappointing.

Spoiled by record profitability, stagnant wages and investor interest in dividends and share buybacks, corporate executives have been coasting. They're underinvesting, resulting in the slowest rate of capital formation – new machines, factories and equipment – in at least the past 60 years.

If we don't want the recovery to die out, it's time for CEOs to man up. I use the slightly sexist term intentionally. You see, three of the CEOs who have stepped up are among the most prominent women in business today.

3 getting it done

We need more of the type of leadership being shown by former eBay (EBAY) CEO Meg Whitman as she tries to turn Hewlett-Packard (HPQ) around with new products such as the Moonshot server line, the world's first "software defined servers" that cater to cloud-based providers of services for computer users.

We need moves like Yahoo (YHOO) CEO Marissa Mayer's $1.1 billion acquisition of Tumblr and her push to expand Yahoo's mobile presence. Perhaps recognizing the risks, she has promised not "to screw it up" while pursuing video sites Hulu and Dailymotion.

Or how about IBM (IBM) CEO Virginia Rometty's decision to go after SoftLayer, the world's largest privately held provider of cloud computing infrastructure? As a result, IBM nabbed 13 global data centers as it works toward a goal of $7 billion in cloud revenue by the end of 2015.

These three are not frozen by fear of Obamacare. They're not running scared that the Fed might close the spigots of easy money. They're just getting it done.

Compare this to comments from the latest survey of CEOs by the Business Roundtable, a group headed by Boeing (BA) CEO Jim McNerney, which noted that the soft outlook for hiring "may reflect ongoing uncertainty and a wait-and-see attitude about the business climate in the United States, as agreement on the nation's debt and budgetary issues remains elusive."

What we need are more CEOs willing to take the lead and improve that business climate. That's not Washington's job.

We need CEOs who earn their outsized paychecks by demonstrating leadership skills instead of acting like middle managers maintaining the status quo. They need to look beyond the near-term issues to think more strategically. That will lead to investments in tangible assets, which in turn will require new hiring.

If they don't get busy, we'll all suffer for it. The Fed and the government can't do it all, and shouldn't.

Rusting away

The nation's economic potential has already been diminished. Instead of near 4% annual GDP growth, we struggle to stay above 2%. Instead of creating the 300,000 jobs a month typical for a recovery, we create 175,000 and call it a victory. Older machinery and a lack of investment pull down productivity, which in the end results in less-efficient workers.

We've seen the weakest post-war recovery on record. Some of this is due to the hangover from a credit binge and result of an asset bubble bursting. Some of it due to forced budget cuts after years of freewheeling spending out of Washington.

But a key linchpin has been a lack of capital spending by CEOs, who are sitting on massive cash reserves and enjoying massive free cash flows – and increasing paychecks. They have been more interested in low-risk strategies such as funneling cash back to shareholders via debt raisings, dividend hikes and share repurchase plans than in growing their companies.

Consider that corporate profits as a share of GDP recently surged to more than 11%, above the 10% peak reached in the last bull market and the near 7% peak seen in the late 1990s. For the 50 years through 2001, the average was 5.5%.

Or consider their cash reserves. As the average American watches savings dwindle and as the overall savings rate falls to just 2.4%, the ratio of cash to assets for nonfinancial companies in the S&P 500 ($INX) has hit a peak of 11.2%, above the near 8% seen during the recession and an average of 6.6% since 1978.

If the average family was collecting more profits and had more money in the bank, we'd feel much better about the business climate than CEOs apparently do. We'd put that money to work.

CEOs not doing business

Despite all this, the chart below shows the crux of the problem: Gross fixed capital formation – which, again, means investment in things such as machinery, workstations and equipment – has been underwhelming. CEOs have barely exceeded their 2000 high and are running 12% below the peak quarterly investment rate reached in 2006.

Gross fixed capital formation

Spending is so inadequate that the economy is "consuming" fixed assets at nearly the rate businesses are investing in new equipment. As a result, the country's base of productive capital is only 1% larger than it was in the depths of the recession – even though the economy is 8% larger and corporate profits are a whopping 60% higher.

So what? Stocks are strong. That makes stockholders happy. The economy is growing, so the numbers look good. Why should a CEO worry?

The problem is that this is akin to eating your seed crop. Underinvestment damages the future ability of any company to grow. It also keeps the economy from growing, which is why we all need to worry.

Why the economy is stuck

One estimate of the economy's potential growth rate, calculated by Gluskin Sheff economist David Rosenberg, shows it falling from nearly 5% a year in 2003 to just 1.8% now. To arrive at this, he looks at the growth of the labor force and adds productivity growth. Put simply, it's how quickly the economy can grow given how many workers there are and how fast they can finish their tasks.

Fewer workers and older equipment limit potential growth. You can see this in the chart below.

"Potential" GDP growth

Our economic vitality has fallen below the nadirs of the early 1980s and the early 1990s and remains well below an average of 3.75%. The official word on this, from the Congressional Budget Office, sees potential GDP reaccelerating to a 2.5% annual rate in 2017.

That means 2.5% growth is the best we can do for years to come unless something changes. And we might not even see that.

If we don't, the risks of inflation will rise as there is less "cushion" or slack in the economy. And it will further pressure middle-class families already hurt by a lack of jobs and the falling real wages that go with it.

Right now, real GDP per capita in the United States stands at just over $48,000, down from a pre-recession high of nearly $50,000. If a 1.8% growth rate is maintained over the next 20 years, and holding population growth constant, this measure will increase to nearly $69,000. Better, but not great. And that's assuming no recessions or other business cycle turbulence.

If the growth rate does rise to 2.5%, this measure grows to more than $79,000. If we could recapture the 3.75% average, it would grow to nearly $101,000. That would be a much more productive economy, helping everyone – including those CEOs.

Behind the fright

So what's holding these CEOs back?

Part of the problem is that revenue growth is slowing and could even fall into negative territory given the recent decline in factory activity. This is a consequence of weak economies in Europe, a slowdown in China and the volatility in Japan.

Image: Anthony Mirhaydari - MSN Money

Anthony Mirhaydari

Another part of the problem is that after years of enjoying a "buyers' market" for employees, some power is beginning to shift back to labor. The most recent National Federation of Independent Business survey shows a growing number of executives – nearly 40%, versus 20% at the recession low – are reporting a harder and harder time finding qualified workers. As a result, wages for skilled workers in key industries are drifting higher. And the rate of firings reported in the government's Job Openings and Labor Turnover Survey recently hit a record low; businesses are hoarding the workers they have.

The result is that the profit picture is darkening.

Executives are lowering second-quarter earnings guidance at a pace never seen before, as annual first-quarter earnings growth (less volatile financial companies) clocked in at less than 2%. Target (TGT) warns of "challenging" customer traffic. Abercrombie (ANF) complains of "external pressures." Caterpillar (CAT) suffered a 9% decline in retail sales of its construction equipment in April. Aruba Networks (ARUN) worries about the impact of government's slight budget cuts so far.

There are other problems. The NFIB survey highlights taxes and government regulations as the top two concerns. That's keeping the percentage of respondents saying it's a good time to expand at less than a third of what it was in 2005, at just 8%. Just 57% made capital expenditures in the past six months, well below the 75% level hit in the late 1990s.

Click here to become a fan of MSN Money on Facebook

But here's the thing: Everyone is in the same boat. The overall economy might be stalling, but there is always the option of trying to take market share from competitors by investing in a new project, a new product or new people. And slower growth of record profits does still mean record profits.

In short, the money's there. Workers are ready, even if you have to pay a little more for the good ones. What's missing is the entrepreneurial spirit and a sense of risk taking that seem absent from too many corner offices these days.

At the time of publication, Anthony Mirhaydari did not own or control shares of any equity mentioned in this column in his personal portfolio.

Be sure to check out Anthony's new money management service, Mirhaydari Capital Management, and his investment newsletter, the Edge. A free, two-week trial subscription to the newsletter has been extended to MSN Money readers. Click here to sign up. Mirhaydari can be contacted at and followed on Twitter at @EdgeLetter. You can view his current stock picks here. Feel free to comment below.