SEATTLE - Banking analyst Meredith Whitney sums up the investment opportunity in the United States as “a tale of two countries” – the idea that states will grow unevenly based on how exposed they were to the financial crisis.

Whitney, who now has her own advisory firm Meredith Whitney Advisory Group, rose to fame for an accurate pessimistic report she issued on Citigroup in 2007. Speaking at the Investing Management Consultants Association annual conference in Seattle, she said she sees two stories emerging in the U.S. economy.

That includes certain areas of the country, the so-called sand states that were most deeply affected by the crisis including Arizona, California, Nevada and Florida, that are in the midst of a slow recovery with sub-2% GDP growth.

By contrast, the central corridor of the United States is thriving, Whitney said, with GDP growth in the high single digits. That comes as the aggregate U.S. economy is growing at about a 2.5% clip.

“It’s a tale of two countries, it’s a bifurcating country in ways that we see every generation,” Whitney said. The country’s last transformation took place in the late  ’70s and early ’80s, when the economy transitioned from a manufacturing-based economy to one that was based on housing and leverage. Now, the areas that emphasized those areas the least are most poised for growth, she said.

What does that mean for wealth managers?

“You have an opportunity to talk to your clients and invest yourselves on a basic long short strategy that is long high single digit growth and short basically de minimus growth on the coasts,” Whitney told the audience comprised of financial advisors and investment professionals. “That’s not going to get better any time soon. I think it’s going to get worse.”

The story of the two different economies in the U.S. has also affected financial institutions. Whitney said she called the large financial institutions in the U.S. uninvestable in 2009, and that has not changed. Today, she complains that the leading companies rely too much on cost-cutting instead of growing their businesses.

“I’d rather invest in revenue growth and operating leverage,” Whitney said. “The theme of cutting costs and cutting your way to prosperity is not a sexy theme to me.”

The banks in the central corridor of the U.S. are also positioned to fare best, Whitney said, with higher growth rates and returns on equity.

Still, there are segments of the U.S. population who will not qualify for the banking relationship they want, and those consumers will likely turn somewhere else to get the access to credit they want, Whitney predicts. “A shadow banking economy is emerging, and that’s dangerous for the economy,” she said.

Another problem that will continue to play out are the social issues that will crop up. When certain residents fall short of their financial obligations, everyone in the community shares that tax bill, Whitney said. And when governments honor their obligations to municipal bondholders, sometimes that may mean cuts to public educational programs.

“In states that don’t have the revenues, and have to pump their way into prosperity, which obviously doesn’t work, you’re going to get to these issues,” Whitney said. “Why are my kids’ education less important than my neighbors’ pension? Why is my neighbors’ pension more important than my municipal bond?”

Whitney said she has a reputation as a “doom and gloomer” because of the bearish calls she has made. But for most of her career, she said, she has been a growth chaser. The key is to look for the opportunities where investors can find growth.

“There is a great story about all of this, which is how resilient the U.S. economy is,” Whitney said. “Just be prepared and invest wisely.”

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