It may have gone under a bit in the recent euphoria about better than expected economic data, but the data that has to cement any kind of green shoots and put any recovery on a healthy path is the consumer related one. The German retail sales data and US personal income and outlays data clearly show that this area is lagging and potenitally will lag for a while.
High and potenitally still rising unemployment, balance sheet deleveraging and a tightening credit environment are all factors that remain an obstacle for a recovery in consumer spending. In this environment the consumer still favours to save and focus on repairing own balance sheets despite of spending stimuli.
If consumers do not increase their spending in the near future then this lack of a pick-up in spending will raise the risk of a double-dip and the “recession has come to an end” theme will blow out.
