Economy is growing, but stock markets are down, and banks are closing.

What a weird economy we are in. It seems most news reports continue to contradict the realities we live in. Most reports are stating the recession is over and that the economy has grown by 5.7%, the fastest pace in 6 years.

Jan. 29 (Bloomberg) –

The U.S. economy expanded in the fourth quarter at the fastest pace in six years as factories cranked up assembly lines, indicating the recovery may be strong enough to be weaned from government support.

The 5.7 percent increase in gross domestic product at an annual rate reported by the Commerce Department in Washington today exceeded the 4.8 percent median forecast of economists surveyed by Bloomberg News. Separate reports showed consumer sentiment and a barometer of business activity rose more than forecast in January.

And yet with this positive news, the stock markets which are suppose to be leading and not lagging indicators of the economy went down in January.

Market Watch:

On Wall Street, stocks fell Friday as investors turned defensive, with the major indexes posting monthly declines. The Dow Jones Industrial Average(INDU 10,067, -53.36, -0.53%) fell 53.13 points, or 0.5%, to 10,067.33, leaving it down 3.5% for January. The S&P 500 Index (SPX 1,074, -10.66, -0.98%) fell 10.66 points, or 1%, to 1,073.87, leaving it with a 3.7% drop for the month. The Nasdaq Composite Index(COMP 2,147, -31.65, -1.45%) slipped 31.65 points, or 1.5%, to 2,147.35, a level that represents a 5.4% decline from the end of December.

“We may be in for another challenging year for equities, according to the January barometer,” said Sam Stovall, chief investment strategist at Standard & Poor’s Equity Research, of the old adage that “as January goes, so goes the year.”

As far as banks go, we bailed them out with taxpayer money and they never increased lending. Supposedly, the banks are strong again posting record profits and paying big CEO bonuses. Instead, they are still shutting down. For January we are up to 14 banks.

Wall Street Journal:

U.S. regulators closed at least five more banks on Friday, including two in Georgia, as the fallout from the financial crisis continued to be felt by smaller financial institutions across the country.

The failures included Cornelia, Ga.-based Community Bank & Trust, with$1.21 billion in assets at Sept. 30, and First National Bank of Georgia of Carrollton, Ga.

The latter, with about $833 million in assets, was found by the Office of the Comptroller of the Currency to be “critically undercapitalized” and to have engaged in “unsafe and unsound practices.”

The other three banks closed by regulators were Florida Community Bank of Immokalee, Fla.; Hallock, Minn.-based Marshall Bank, and First Regional Bank, of Los Angeles. First Regional had roughly $2.2 billion in assets at Sept. 30, along with $1.87 billion in deposits.

The failures bring to 14 the number of U.S. banks taken over by regulators in 2010. There were 140 bank failures in 2009.