No, this is not an article to Congress and the Supreme Court Justices regarding manners for a presidential address.

But it is an article to identify the good and bad finanthisl news which continues to bombard us for 2010.The government is more optimistic about 2010 than money managers on Wall Street.

The U.S.

Government believes the economy will grow at 3% during 2010, but this sentiment clashes with Wall Street experts who believe growth more around 2%.

2% growth may be slow enough to actually feel like the recession is continuing.

When the economy barely grows individuals are more likely to be more finanthislly conservative.

This means individual are more likely to save more, reduce debt and spend less.

Spending less will place continued pressure on the economy to stabilize and grow.

Bill Gross, founder of Pimco, believes long-term growth will remain stagnant.

Mr.

Gross believes the “new normal” of slower growth is due to deleveraging (repaying debt), re-regulations (which is in the starting phase) and de-globalization.

The optimism of the government numbers may be to spur a feeling a safety so you go ahead and spend your money.

I believe the government is too warm and rosy and individuals should be more finanthislly conservative.

The government gets a “You Lie!”A sigh of relief can as the Gross Domestic Product (GDP) for the fourth quarter of 2010 came in at 5.7%.

This was not traditionally as strong of growth as a normal rebound from a recession.

This indicates the economic recovery might be slower and longer than we want (years, not quarters).

The 5.7% growth sounds great until you look into the detail.

3.4% of the 5.7% growth came due to inventory rebuilding.

Dave Rosenberg of Gluskin, Sheff believes the adjustment to inventories is not the beginning of a new cycle, but a realignment of merchandise in stock.

Businesses depleted inventories and waited months after they should have to reorder.

With the consumer still cleaning up their balance sheet and domestic demand increasing at only 1.7% it is most likely a one time add and will not repeat in future quarters.

Without this one time inventory push the growth would be more around weak 2.2%.

Mr.

Rosenberg believes “this epic credit collapse is a pervasive drain on spending and very likely has another five years to play out.” It seems as if the only reason for growth was the additional government spending which is not healthy for the economy or sustainable in the long-term.

The 5.7% growth is awarded the “You Lie!” trophy!The market has had a fantastic run from the March 2009 lows through December 2009.

The markets are up some 60%.

However, recently (January and February 2010) the markets are having challenges continuing its upward one way trend.

The last several weeks (January and first week of February 2010) have provided a challenging market.

“Yet there s a reason that the technical view is getting more attention now: The market simply has declined, for the time being, to respond positively to passably good news” observes Michael Santoli of Barron s Streetwise.

Kopin Tan confirms the market sentiment by stating “there was no shortage of good news, only a dearth of buying in response.” It seems as if 9 out of even 10 economists, which forecasted smooth sailing the first six months of 2010 with challenges the last six months of the year get a “You Lie!” on their resume.The unemployment rate was released for January by the US Labor Department and it fell from 10% in December to 9.7%.

Unfortunately, job losses continued and they increased by 20,000.

It seems odd that the unemployment rate managed to decrease.

The Labor Department was several metrics to calculate the ratio and they all influence the ending result.

Economists were hoping for positive job growth, so the report was a little disappointing to many readers.

The underemployment measurement, called the U-6 and the broadest measurement of unemployment, decreased in January from 17.3% to 16.5%.

The U-6 report confirms unemployment is heading in the right direction.

If the U-6 rate increased or stayed level it would have been a negative indicator.

However, with unemployment losses slowing and the unemployment rate decreasing we get to “Stand Up & Clap!”We are taking the right steps to correct the situation.

Although individuals were slow to respond, perhaps partly due to denial and to the pain of changing one s life style, individuals are enacting the necessary courses of action.

Roger C.

Altman has stated that “there are two dark clouds over the economy over the short term.

One is the finanthisl condition of the American householder and the second is the finanthisl condition of our banking system.” The household faced a debt-to-income ratio at 140% (a 35 year high) and then saw 20% of their net worth disappear due to the bear market in equities and decreasing residential properties.

With the average US household income around $50,000 there is not a lot of wiggle room in this type of situation.

So householders did what they needed to do, they spend less, began repaying debt and decided to build their savings accounts.

We are starting to become finanthislly healthy again.

One of the problems we faced is during the times which felt good households stopped saving.

This lack of liquidity and increase in debt has made this slow down feel worse than it should have been.

Mr.

Altman believes it will take (at least) through 2012 to correct household finanthisl positions.

The banking system took a few missteps as well (most of their dirty laundry seems to be on the evening news).

However, banks are taking aggressive steps to recapitalize and restructure their balance sheets (one of the reasons they are not lending as much).

Both households and banks are focusing on restructure instead of profit growth.

Although it is a challenging environment, individuals and banks are taking the appropriate short-term steps to correct our economic situation in the long-term.

We get to “Stand Up and Clap!” Although, let s not pat ourselves on the back quite yet.The “You Lies” seem to have won this episode.

To plan for the long-term recovery, individuals and businesses should continue to make the short-term sacrifices to strengthen our finanthisl position instead of additional consumption.

This will allow them to rebuild our finanthisl foundation and have a better future, in the future.

If we are able to continue sacrificing in the short-term then in three to five years we will be able to Stand Up & Clap!Mark Wyssbrod, Pro @ctive CPA, has been helping small businesses achieve their goals since 1999.

His proactive philosophy stems from the fact that traditional tax preparers are usually simple historians who react to their client s prior and current positions.

Such a reactive stance means trying to fix mistakes after those mistakes are already made.

These philosophies have contributed for Mark s ability to forecast the economy accurately since he started in 2005.

Mark would rather prevent any mistakes in the first place.

Mark is the Managing Member of Pro @ctive CPA and CEO of Pro @ctive Updates.

You can reach Mark at (770) 664-8583.

Source: ezinearticles.com

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