the engine of the american economy...small business....and the stiff competition for small companies to get big bucks by doing business with uncle sam. plus....reading between the lines from the federal reserve. the evolution of economic expectations...from lots of uncertainty to a very likely end to the recession. and...the cost of illiteracy. hear from a guy who didn't learn to read until he was 48...and how education is key to a growing economy. it's all ahead on this edition of first business. it may be hard to believe that when you're go this week the economy took a dive off a cliff to the limit by the collapse but here we are thanks to some big rallies in stock prices we are back to the levels in the s&p 500 we haven't seen since last september in seems eyestalks are reacting to positive economic data. this week positive numbers on industrial production for both months of july and august it

could very well mean that the manufacturing sector we session and that persist it sector may very well be over. it may be good news and the treasury department efforts to take toxic assets of the bank balance sheets begins a first initial test if but the first option go into a texas firm and about $64 million why know what half a billion dollars roof home mortgages. the next 12 months will be crucial for small businesses across america.. most of the nearly 800 billion dollar economic stimulus program - will be spent in 2010 and 2011. and now the federal government is stepping up its efforts to help small businesses get their piece of federal contracts. there's been much criticism... leveled against the federal government... that it awards contracts to america's largest companies... and doesn't do enough to help the real engine ofmerica's economy... small businesses... "the missed opporutniies.. lies with small business... not recognizing.. that opporutnity

they have.. their service gov't needs.. and making sure they get in process... fairly complicated " business owners say the process of getting a federal contract can be overwhelming it's a bit daunting.. if i was doing it on my own.. thrown up my hands. .and given up at this point there's a lot of paperwork.. red tape sortinghrough that is overwhelming it's one of those things if you take it little at a time.. recent data shows the government has been improving in its efforts to award business to smaller companies.. in the fiscal year of 2008, 93 billion dollars in federal contracts went to small businesses.. that's up by 10 billion from 2007. but, it's still under the mandate requiring 23% of federal contracts go to smaller companies. "because some agencies had to buy large ticke titems.. from large manfuacturers.. there are no small companies that make jet aircraft.. that will skew

the numbers.. " experts say now is the time for small businesses to make a greater effort to obtain federal contracts.. federal agencies are participating in more than 200 small business events across america. "there is tremendous amount in construction that has gone to small business... many opportunity.. for it. .medical equipment.. supply.. with recovery act for small businesses" "right now.. gov't trying to get rid of money.. announcing programs to make businesses aware" and there are some success stories.. from small business owners lee mauney who's company makes ergonomic office chairs... brings in 4 million dollars a year in revenue from government contracts. i think there's not whole picture.. miscommunications..

between companies getting large contract.. ut those dollars going to small business many of the federal dollars awarded through contracts with large companies.. also filter down to small businesses.. that act as suppliers to the big firms. a year after the collapse of the week of lehman brothers summit look at the stock rally up by better than 50% in the press one of those over at the cme group based oryx is not one of those days you have been too impressed with this market rally. tom as a matter of fact if we weren't raleigh and i would be really really concerned. i will be concerned about the country i'd be concerned about the government and i'd be concerned about the well-being of the planet. you have everybody and their brother who is supporting the market teeth in order to try and make things right. the financial system is not going to collapse. that's pretty much what this rally is all about. and assisted by the powers to be. and it's a

good thing here and we're building higher prices after higher prices in the everyday. not a bad name but something that you must take note as a traitor. the dollar continues to be weak apparel continue to be strong. of crude oil that has to be some disconnect there somewhere. as equities continue to rise. also you have to take into account as a minute on the same tomorrow to have to take into account the some 0.86 strategy will take hold and we will find out exactly what we have in and we were able to build something that's going to stay. i do hope that we have. under is very concerned. we have seen a little bit you can call it an exit strategy the treasury promising is going to wind down a significant degree its short- term lending with cash reserves going to the federal reserve the supplemental financial lending but we saw a place about one year ago and the market rally still. they took that as a positive sign for sure it

will probably be a gradual exit. i wouldn't think that they will pull the table cloth right out. at the doobie kind of an audible package as we go removing get as we go and probably the proper thing to do. once again we are into rally that is provided no additional job growth. we have to leave it there my friend will call you on impressed dave bahoric cut. thanks a lot. thank you. still to come the high cost of not knowing how to read...how education could equal employment and more money...when it comes to the workforce. but first....how the federal reserve has been hesitant to predict a full-fledged economic recovery...that's next.

the economic recovery may be underway but the government's top economic experts are very reluctant to give a full- throated endorsement of a bounce back. instead, the economic assessments are full of caution. mike miller is an economics professor at depaul university. welcome back. " we have had here in the last 48 hours there is an admission on the federal reserve chairman that he thinks technically the recovery has

begun. he is looking at what we will call the concurrent data that shows the industrial production mckinny to pickup in sales are picking up and these are signs of the early start in into economic recovery. still a note of caution and his assessment less caution that we heard from one to go. let's hear from the chairman earlier this week we talk about technical recovery likely. still that note of caution may be a recovery but don't expect a whole lot from this recovery. what they're doing is looking at the data in their assigned probability to various out, as you get more data and the data pointing in the same direction you can state beans with more confidence patrick in never and economic stakes uncertainty

doesn't and is quick to happen. the want to put a percentage of the probability of what the chairman is calling for renown? to interpret fed speak you have it if you say something is likely make it as a 85 percent chance if he's a very likely is a 90 percent chance if it were on certain debt or talking 5056-foot in a corner. the evolution of this economic expectation back to january chairman burnett he said the economic recovery is likely to be relatively slow f first with unemployment declining gradually from high levels. this will ultimately wind up start saving of a back injury rate it was the timing and strength of the recovery highly uncertain. this has evolved quickly has in it? we'll wait for something that caused by the stimulus by the fed policy by confidence in the banking system by confidence in the consumers they all seem to be then to call together and were using those kinds of terms they're beginning to come together and that will lead to

the probability of a percent that we have already bought. the number two guy at the federal reserve actually said my best guess he had to use the word gets in april and for relatively gradual recovery though a very wide range of uncertainty surrounds that all look. q we are four short months later and beriberi are likely recovery. one thing we are still uncertain about is which direction this will go. will it be a piece h a w shape or a u- shaped. it is a perfectly clear how strong the retail sales are born to continue to build or all cells and housing issues have they hit bottom and are they really rising? is it isn't until the end we will move from uncertainty and a looks like the expansion will pick up. there is still the couch in the the federal language the federal reserve government to downturn in credit and the most recent quarter provides reminded that conditions are still far from normal-just as recent as a

few months ago. in our discipline of economics were talking essentially a statement of probability and these many are economists and they understand that they are going to expect something could go wrong. therefore they have to soften their tone in their policy makers. are they setting apart too low? so that is easy for them as policy makers to sabin were able to deal with this hurdle for higher than we expected. i will believe that that's not the case i saw researched compared gdp in unemployment to a private forecast of what they found in the fed errors were about the same size as the private sector. this tells me that they're not putting on rosy glasses and are not making things worse. in terms of the disciplined and ability of the forecast is unknown. is he there were snore better than average forecaster. would you expect to move into the fall federal reserve meeting and talk about removing some of this monetary stimulus more certainty coming

from some of the beast language. airborne to parlay because it the need to instill confidence in the american people on the big system that what they're doing is correct. exactly right if you will see as the fed makes more pronounced decisions they have to face down and act in a way of confidence so you will see this occurring if the fed began to see that they are not sure what will happen will pull back it will begin to say where boy used words in our f m o c status-uncertainty. and the investment decisions. thanks so much for reading in between the lines. mike miller professor economics at depaul university. online items on our website...search the phrase "cap and trade" to find several reports on the environment and the economy...including how one steel making town in pennsylvania hopes the strategy will create new green jobs. and an extra stock pick from jim oberweis....a combination

of roofing material...and face masks to fight the swine flu....you can find these stories and more on our website first businessx.com. and straight ahead on the show.... what one author calls america's secret.....the cost of illiteracy.....that's next.

two things may help determine the success or failure of any job hunt more than anything elsewhere you liveand how much education you have. if it's less than a high school diploma, the unemployment rate is close to 15 percent. if it's a college degree, the unemployment rate is closer to

five percent. but an education may not guarantee you can read the job application. john corcoran was one of those. he's the author of the bridge to literary. he was a schoolteacher and real estate developer who did not learn to read until he was 48. welcome to the program nice to see you. a very compelling story you were illiterate to the age of 48. you were a public- school teacher and a real-estate developer. how was it a you get to the part of your life with the ability to read and a second grade level. about 30 percent of the population and learn how to read like birds fly about 30 percent of the population has difficulty acquiring language skills. america has a secret. i lived in the shadows of that secret and we have not been taking all of our people how to read write and spell. we have an illiteracy epidemic in this country and we are now putting back to get birth our economic system one of the critical components to putting it back together is to deal with the fact that 30 percent of our kids are dropping out of school and if you're hispanic or black it says is many as 50% there is the dominant language for success in school is a written word and

the dominant language for the workplace is a written word and if you can't read or write you're not going to get all the information highway you're not gonna be a participant. and america's not recover. some estimates say that a% of jobs that will be available and that economic recovery is still to come hopefully are going to mandate a 12th grade education and ability to understand comprehend and critically analyze. the probe re-education must include reading and writing we've been graduating millions of kids from our schools for decades now that can read past the sixth grade level. were you begin to assign blame and solutions? i'm going to stay away from the plane but first to articulate the problem and to solve any problem you have to be able to define it.

whether it's a personal problem or an economic problem or educational problem. the problem is that we have failed to teach and i might say little boys and little girls like me to read write and spell is proper instruction. the proper instruction comes from properly trained teachers and they come from universities were properly prepared. we must look at the university's and how they are preparing teachers. we are looking at the third grade teacher and universities have to be held as responsible bring everybody into the play what i would like to see at the table of our recovery here we know we have to fix the banks we have to fix a lot of things we have to fix education and we have to really focus on it and articulate the real problem real problem and real plain english we have failed to teach people how to read write and spell. i originally cited 2002 had a great deal of focus on

literacy and committed $900 million to help american school kids learn how to read write and spell has the money and real spent? i cheered from the bill and that was a bipartisan bill. ted kennedy's fingerprints or all or that and president bush's fingerprint from all over that period that contaminated in the political world so to answer your question about the money that politics also in the money was spent the antenna and the spirit of the devastation was disrupted it was toxic because he couldn't get anyone to have eight object of discussion about so collapse the new a ministration they committed to a lot of these in the law and we're gonna see them coming back in a different form in a different name are you satisfied with the focus of

leprosy? i want to hear the president of the united states and the secretary of education talk about pacifically used plain simple language that we need to teach people to read and write and spell. not talking about the all need to go college they all need an education and that is safe things to say. i want to be specific and we identified that and we do have one of the things that we did in education bill last three or for five years we spent $100 million on research that money was well spent. we have the science now and is there. " we have to do the challenge right now is the gap between what we know and what we do. the fruits of that trio we appreciate the name of the book is a bridge to literacy.

this week we have positive news from the industrial sector coming in chart talk will take a closer look at the industrial e t f.

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this time we are taking a closer look at the exchange traded fund attracts big industrial companies as we did have some positive news on industrial production this week pause until for july and august so is x l i is the e t f that tracks these industrial companies and is up about 15% stay wary. if you're a bull this is the signs. if this is a cyclical industry you are talking about big industry heavyweights as general electric commonwealth 3 m

united technologies included in here. along with the broad market trying to break out here to some new highs. this thing is off and running certainly well above what had been some resistance just below $26 a share. this e t f tracks company that basically make airplanes. big engines and parts for cars. these are the heart of our economy is companies that make big things that help the engine of our economy taking a look at this industrial atf it is still up to 15 percent since jerry but still a ways off from it ties into thousand a with this e t f reaching about $40 a share still really climbing out of that whole may from last october but it is trying to. a lot of head room here as u.s. industry only working at less than 7 percent capacity according to the latest data. we want to hear from you in your capacity in this economy comments at first business x. c o m and of course

of voice mail number as well 31266058397. see you online or back here next time.