Today at TILE, we talked about the difference between Wall Street which is rebounding and Main Street which seems to be struggling due to uncertainty about the future. We asked why is the Dow still near its 12-month high of 9800 while unemployment is also at a 26-year high of 9.8%? If investors are “bullish” or positive about stocks and pumping new money into companies, why are companies still not hiring? Shouldn’t we be worried that job seekers outnumber job openings by six to one?

Basically, the financial markets, the economy, and the financial health of your school/company/family are all interconnected. It’s a bit like a game of Pick-up Sticks or Jenga; each piece is dependent on the others and without one, the structure could tumble. In the current environment, the key “building blocks” being discussed are Consumer, Government, and Business behavior – and each one reacts differently to the world around it.

For consumers, spending is way down and savings is up. The consumers’ decision to spend less means that stores or restaurants or travel destinations need to plan for lower sales and fewer visitors. Think about it: if you aren’t certain you are getting a raise at the end of the year or a bonus (or that you will even have a job) will you spend more or less on new clothes, restaurants, and concerts? In the recent past, consumer spending has been boosted by the fact that the value of homes has increased (giving a sense of richness), easy credit (“I can always borrow a little more”), and an overall mood that excess was good. But with a general sense of uncertainty, spending has declined significantly.

In contrast to individuals, the government has increased its spending – and is building its debt instead of paying it back. Total public debt stands at more than $11 trillion today and the 2009 projected deficit is $1.8 trillion. Compare this to total debt of $5.6 trillion in 2000. In essence, the government is trying to pick up where consumer spending fell short – by chipping in a bit more. The problem is that no one is sure that the government can keep spending long enough to cover for the consumer. In addition, we all know that larger government debt or deficits eventually mean higher taxes. Someone has to pay off the debt at some point.

The business community is taking it all in. Short-term, they are being thrifty and benefitting from the increased government spending. Longer-term uncertainty remains. Until they have a clearer picture, most companies will tend to hold onto cash and not make large investments – either in people, inventories, or equipment. Businesses are enjoying the current rise in stock prices, but not yet ready to invest in the future. And until companies start looking ahead and consumers start spending, it is doubtful we will see the unemployment figures falling materially – even if our portfolios are looking a little better.

What does this mean for the TILE community? For those of you looking for a part time job, thinking ahead to next summer, or contemplating life after graduation, you are, unfortunately, facing a tough market. The good news is that this is an excellent time to volunteer for a charity or pursue an internship. There are a lot of great nonprofits and companies looking for volunteers and interns – especially now. You can learn more about what really interests you and get your foot in the door to gain experience or learn what you want to do next.

- Amy