All Those Stock Buybacks: A Bullish Sign?

In what may be a vote of confidence in the economy and their own business prospects, companies have authorized spending more than $453 billion to buy their own stock this year, putting 2011 on track for the third-highest annual total behind 2006 and 2007, data compiled by Birinyi Associates show.

Some analysts view the increase as a sign that companies can’t find anything better to do with their money amid economic weakness. Yet bulls say the rise shows executives are confident the U.S. economy will avoid a recession, which looked far more likely midyear. “If the corporate community really agreed on the idea we’re heading to a recession, they wouldn’t be buying back their stock,” says James Paulsen, chief investment strategist at Minneapolis-based Wells Capital Management, which oversees about $333 billion.