Fundamentally: Consumers May Need to Retake the Recovery’s Reins

By Arohan: After Friday’s stock market rally, does anyone even remember that just two days ago we received data that showed that the consumer confidence sank to the lowest level since March 2009, a two year low?

WASHINGTON – Retail sales rose in November and jobless claims fell sharply last week, hopeful signs for an economy that appears to have slowed sharply in the fourth quarter. Retail sales rose 0.3%, rebounding from a 0.3% decline in October, the Commerce Department said on Thursday. Economists polled by Reuters had expected an increase of 0.5% last month.

OTTAWA — Don’t count on North America getting its economic mojo back any time soon. In fact, the slow recovery in the U.S. from the “Great Recession” will continue to hamper renewed expansion in Canada as well, the Bank of Canada warned Thursday. The U.S. economy is likely to remain on a moderate growth path “for years to come,” the central bank said in its quarterly review of global economic issues. “Understanding the trajectory and characteristics of the U.S. recovery has important implications for the Canadian economy and, this, monetary policy.”

Saj Karsan submits:Many economists project a slow recovery from this recession, as consumer spending, which makes up more than two thirds of the economy, is not expected to rebound any time soon. On what basis are economists making these projections? Mounting job losses are a major reason why consumer spending is not expected to be strong, and serves as a risk to the economy going forward as we discussed here.

WSJ: Bernanke Notes Risks to Recovery In prepared remarks, Mr. Bernanke said the U.S. had a “considerable way to go to achieve a full recovery in our economy, and many Americans are still grappling with unemployment, foreclosure and lost savings.”

Tom Schumacher submits:Love them or hate them, when Goldman speaks you should listen. The Goldman Economic Research team, headed by Jan Hatzius has spoken out on Friday's impressive GDP numbers. Hatzius notes the two recovery "camps" that have emerged among US economic forecasts. The first camp is the "V-shaped" recovery camp which believes the crisis pushed production , employment, and consumer spending to excessively low levels and that economic activity will rebound strongly.

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