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The Known Unknown

When analyzing the U.S. economy's recovery prospects, one key factor that often comes into play is perhaps the most difficult to nail down: pent-up demand. At the moment, households are cutting back on discretionary spending and rebuilding their savings. A time will come when consumers start to feel more confident about broader economic conditions and ultimately open up their wallets, putting some of those saved-up funds to use. Economists often underestimate the strength of an economic recovery for several reasons, but chief among these reasons is that identifying when (and if) pent-up demand will materialize is difficult precisely because it can be influenced by subtle changes in consumer sentiment. Whether that happens in this business cycle...well stay tuned to find out.

Posted 07-31-2009 4:23 PM by Brian Lego
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