The Dow is at 10,000. Reporters glow. Retirees relax. Investors sigh: Whew, weve made it.

Theyre wrong. This purported milestone isnt a victory. Its nonsense.

The market is the wrong place to look when measuring the health of our economy. The collective wisdom of mutual fund analysts was wrong in 1999, wrong in 2006, and its wrong right now.

The best investor in the United States basically ignores Wall Street. Warren Buffett has billions he could trade in and out of stocks. Thousands of analysts would clamor to give him hot tips. But Buffett ignores it all. Serene, he sits in his office, reading annual reports, newspapers, and thinking about opportunities for growth. He isnt drinking champagne tonight. And you shouldnt be either.

We are far from out of the woods. Large companies are still laying off employees. When we cross the 10% unemployment line, consumer spending (now down to 70% of GDP) may contract even further. It probably should. Consumer spending in the UK is 65% and in China its only 40%.

Havent we learned something from this crisis. Wall Street sold the world worthless securities, trillions of dollars of wealth evaporated, and now Wall Street is cheering this new bull market. Now the bulls say its all okay again.

What youre watching now is a bull market on government spending. What you should be watching is the real report card:

• Inflation. There is $50T in unfunded liabilities on the countrys balance sheet. If the USA played by corporate Americas accounting rules, wed be bankrupt. The laws of gravity still apply. We will experience significant inflation within 3 years.
• Job Growth. Since the start of the recession in December 2007, weve lost 7.6 million jobs. Millions more have stopped looking for work. The analysts keep saying this downward trend will stop. But it hasnt.
• Innovation. The credit contraction makes it harder for entrepreneurs and small businesses to invest in growth. This segment of the economy is where a rebound will start. Dont watch the Dow, watch small business credit (contracting) and patents filed (contracting).
• Education. The important word in Gross Domestic Product is product. We must have highly skilled knowledge workers to compete against other economic innovators. A third of high school students arent graduating. This is the HR pipeline??

Yes, we have stepped back from the abyss. But some very smart people thought the same thing in 1932. Then 1933 happened. Not so fast, Wall Street

This battle is far from over. Lets dig deep, focus on the long haul, and make the substantive policy and business improvements the economy needs to really rebuild. Then, the Dow will take care of itself.