All we seem to hear about is subprime. And for good reason. The extensive use of imaginative mortgage products to put people into homes who couldn’t afford those homes was a major driving force in the economy. But that is all behind us and if the recent highs in the equity markets are to be sustained and built upon, economic growth will need to be sustained.

With the credit crunch having hit in August, worries abounded that the economy could tumble. Those concerns were magnified by the August employment report, which initially indicated that firms cut payrolls. The first job decline in four years was a shock and ultimately led in mid-September to the Federal Reserve reducing the funds rate by 50 basis points.

But then we discovered that the Bureau of Labor Statistics has some trouble counting. The August payroll decline of 4,000 turned into an 89,000 increase. July’s soft job data was revised upward as well. The private sector is still adding workers, though the three-month average gain was still less than 100,000. That may be enough to keep the economy going, but clearly not enough to cause firms to be irrationally exuberant.

So, what state is the economy in? The data does seem to point to us skirting a recession, but it all depends on the consumer. Job and income growth are decent enough to generate at least mediocre spending. But we have yet to see the price increases that will ultimately come from the $80 a barrel oil. The housing market continues to spiral downward and falling home prices will likely further slow spending. So don’t look for the consumer to shop ‘till they drop, even if they keep shopping.

There are also risks that business investment will slow. It has already softened as uncertainty about the economy has risen. Rising wages and falling productivity, which are putting pressure on costs, could further restrain capital spending.

Putting this all together, it seems that the economy can continue growing. But solid growth just doesn’t look to be in the cards and that is what worries the Fed. Any signs that consumer demand is fading would likely lead to additional rate cuts. The funds rate is still fairly high and the Fed has yet to move from the brake to the accelerator. To do that, we would need several more interest rate reductions.

For investors, the economic data is neither fish nor fowl. No recession right now but no strong growth either. And that could be the condition for the rest of the year.