Q: Are the early positive signs of increased holiday spending signs for an upswing in the economy for 2012?
Yes. Consumers do appear to be more willing to spend as many households have reduced their debt burdens and interest rates have dropped. Still, many headwinds face the economy. Europe’s sovereign debt problems persist and the region faces a recession or exceedingly slow growth next year. The U.S. could see a significant drag if unemployment benefits and payroll tax cuts are not extended, while the long-term deficit issue has not yet been solved. Businesses remain uncertain, which will likely keep a lid on job growth. On balance, more U.S. consumer spending points to a better 2012 but growth is likely to be only moderate.