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US Economy On the Rebound, More Jobs Coming: Cisco CEO

The US economy, led by a surge in corporate spending on equipment, has moved into the second phase of the recovery and will soon lead to job growth, a bullish John Chambers, CEO of Cisco, told CNBC Thursday.

Cisco Systems chairman and CEO John Chambers speaks during a press event at the 2010 International Consumer Electronics Show in Las Vegas, Nevada.
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Cisco Systems chairman and CEO John Chambers speaks during a press event at the 2010 International Consumer Electronics Show in Las Vegas, Nevada.

The sharp increase in capital spending, Chambers said in a live interview, is a precursor to jobs growth for the entire US economy. His conversations with business and government leaders at last week's economic forum in Davos, Switzerland, also convinced him that sentiment has improved across the globe, he said.

"There was not a single leader that I talked with that didn't think either their business or their economy was in dramatically better shape than just two quarters ago," he said.

Cisco , the leading maker of computer networking equipment, is often considered a bellwether for the technology industry, and sometimes for the entire economy.

The company posted better-than-expected quarterly sales and earningsafter the bell on Wednesday, pushing its stock higher in an otherwise sharply lower market on Thursday.

Due to this increase in orders and the company's movement into other markets, Cisco has committed to hiring a minimum of 2,000 to 3,000 workers in the next two to three quarters. That's on top of the 2,000 it hired last year.

It's also proof that in the steps to recovery, first comes jobs and the economy, then innovation, which is followed by becoming an export nation, Chambers said.

"What does it mean to the Cisco employees? More jobs, and over time a higher standard of living will happen," he said.

But some found Chambers' outlook too bullish, as the economy — specifically the employment picture — continues to move sluggishly. Thursday's jobs report showed applications for jobless benefits are still on the rise, and economists are forecasting Friday's unemployment reading to rise to 10.1 percent.

Others pointed to the charts, saying Cisco's stock has fallen below its 50-day moving average and that it could return to its downtrend.

In Thursday's interview, Chambers said Cisco has nearly returned to its normal growth rates, calling the improvement in its numbers "larger than I've ever seen in my business career."

Two quarters ago, the tech company's new orders were down 25 percent on the year, and in the most recent quarter, they rose 11 percent.

In January, Chambers told CNBC that technology companies are always the first to get a boost, as recovering companies upgrade their technology.