Can Main Street Catch Up with Wall Street?

The article, Can Main Street Catch Up with Wall Street? details the differences of how the economy is viewed between individuals on Wall Street and your average citizen on Main Street. Many economists feel that the recession may be nearing its end because the Dow Jones is above 10,000 and earnings of major corporations exceeded expectations. Investors note that it is easier for Wall Street to recover after a recession than the job market. However, unemployment has doubled in the past year and foreclosures are expected to top 3.5 million this year, up from 2.3 million in 2008.

The author Moira Herbst states that there are two different types of indicators regarding the economy. "Leading Indicators" like stock prices and the difference between short-term and long-term borrowing costs are examples of this because they tend to signal the status of the economy. "Lagging Indicators" like unemployment and consumer credit volumes tend to recover more slowly, hence the term "lagging." The belief by those on Wall Street is that the leading indicators are soaring ahead of the lagging indicators and that is one of the reasons why they sense that the economy is on the verge of a recovery.

Herbst states in the article Can Main Street Catch Up with Wall Street? that the difference in views on the economy is rather broad. The recession has crushed the job market and those on Main Street are feeling the pinch. The hope is that companies will realize how badly their cuts have hurt the economy and begin hiring again in the near future. At the same time, investors are beginning to question if they are overvaluing the stock market because of the diminished spending power and willingness to spend of consumers. In the end we will see who is right, Wall Street or Main Street.