For U.S. consumers, 2009 is likely to be the year of saving, rather than spending. Although some burdens, such as gasoline prices, have lightened considerably, the cons for the household sector still outweigh the pros. That’s why economists are downbeat on overall economic activity in 2009. A full-fledged recovery will depend on a resurgent consumer, who even after the recent pullback still accounts for 71% of all spending. The biggest headwind for consumers is, not surprisingly, the weakening labor market. It isn’t just the loss of 1.9 million jobs so far in 2008; it’s the job jitters triggered by those layoffs. If consumers worry they may be laid off, they will spend less whether or not their fears turn into reality. But less spending weakens the economy and job markets further. Mending the job markets will be pre-eminent... more...