Oct. 29--The U.S. economy is in purgatory, a market strategist for the financial services firm Stifel Nicolaus & Co. said Wednesday during a visit to La Crosse.

"And I define purgatory as a very dangerous place, actually," Joe Battipaglia said before speaking to local Stifel Nicolaus clients and other invited guests. Battipaglia, of Yardley, Pa., frequently is interviewed by national business publications and business news television networks.

"We don't have growth coming into the economy because we're not creating the jobs we need nor the incomes we need to bring the consumer back around," Battipaglia said. "Asset prices, particularly housing prices, are still slipping, particularly in the higher-end category.

"On the other side of it, we have a tremendous amount of fiscal stimulation and a tremendous amount of intervention by the government, which is sort of throwing soft pillows under everything," Battipaglia said. "But arguably what it's doing is kicking the can down the road a bit in terms of working through the real problems that have to be resolved."

The real problems, he said, include the credit market, the failure of large banks to right themselves and the need for incentives to create jobs.

The private sector "is basically seeking to stabilize at this point," Battipaglia said. "We are not recovering. The big fall has already been taken. The contraction has been quite severe." Demand for goods and services will remain flat for the next several quarters, he said. "To me, that's more of a purgatory description than it is something that's coming on strong."

With the stock market improving in recent months, Battipaglia said he has noticed companies in the weakest financial condition, such as some banks, saw the biggest stock price gains.

"I'm very skeptical of their sustainability as valuations go. So I'd be taking profits in those speculative areas," he said. "And I'd only be buying companies that have very good balance sheets, that have a competitive advantage in the business they compete in."

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