Where are we in this Economy?

From Saturday’s Wall Street Journal – a few interesting stories.

This week the Federal Reserve increased the discount rate by 0.50% - not quite to traditional levels of the variance from the fed funds rate - but a major shift from the past year or so. Does this signal the beginning of a gradual increase in rates? Consumer prices have only climbed 2.6% over the last year – signaling no rush to increase rates. Large companies and large financial institutions are back to profitability – while small business and financial institutions continue to struggle. Wal-Mart sees soft sales for the next couple quarters. Unemployment continues in the 10 to 12 % range, which doesn’t include those who have exhausted the use of their benefits, and the under-employed (who have taken lower paying jobs which don’t cover their needs or debt load). The length of the average unemployed is among historical levels.

What does all this mean? JOBS are STILL the KEY. Larger companies are fairing better – because they are not hiring. With the prolonged employment issues – consumption will continue to lag – which will cause employment to lag. So in short while the economy is poised to move forward – we are not there yet. There is still tremendous uncertainty causing the recovery to take its sweet time.

Washington and Sacramento need to both get beyond partisan politics and be participative in helping businesses solve the job issue. Hopefully, more politicians are beginning to realize that their jobs are on the line – unless they move forward and do their job.