“A Tale of Two Economies…” - September 1, 2009

The market yesterday and for the last several days is sending out a clear signal: it’s not convinced a recovery is here…In fact, it’s confused. And for good reason – we’re experiencing a Tale of Two Economies.

Consider the following:

· On the credit front, there is a gulf between those that can borrow and those that cannot. Big banks and big companies have easy access to credit. Small companies are finding it difficult to borrow…and face stiff terms to do so.

· On Main Street, there are those consumers with rock–solid jobs, but also an army of debt-strapped families struggling to make ends meet.

· Manufacturing is now growing…but more workers are still losing their jobs.

· Some consumers are buying…but only with incentives…like cash for clunkers, dollars for dishwashers or first-time homebuyer tax credits.

· The stock market rally of the past four months has been based on corporate cost cutting, not new revenue.

· The unemployment rate is still in the 9 ½% range – but the number of unemployed and underemployed is almost double, and many have already run out of benefits.

If there is about to be a party thrown to celebrate the end of the current economic crisis, someone forgot to invite two guests – U.S. workers and consumers. If a recovery is not balanced, it’s not sustainable.

Granted, at turning points, economic data can be mixed…but not muddled. If it’s confusing, it’s not convincing. And if it’s not convincing, then there is no confusion – there’s no broad-based recovery in sight. Convinced?