Are US consumers going to get the economy rolling at the speed the markets are pricing in?

In a post yesterday, I indicated that unemployment, and therefore consumers, will be key to the recovery: recent numbers are not particularly encouraging with a continued deleveraging in consumer credit that ties up with an increase in the savings rate. These numbers seem to contradict positive noise on consumer sentiment (rebound in the Conference Board Consumer Confidence index in August compared to the bad July number); personally, I prefer hard facts.

Record Plunge in U.S. Consumer Credit Signals Weakened Spending

Sept. 9 (Bloomberg) -- A record $21.6 billion drop in borrowing by Americans added to evidence that consumer spending will be slow to recover as banks and credit-card companies tighten lending standards and households pay down debt.

Consumer credit fell by 10 percent at an annual rate in July to $2.5 trillion, according to a Federal Reserve report released yesterday in Washington. The drop was more than five times larger than economists forecast. Credit fell for a sixth month, the longest series of declines since 1991.

Do not misunderstand me: I do not say that Amaguedon is for tomorrow, but that equity markets went ahead of themselves and will need to adapt to the reality of the economy.

Sources:

Bloomberg
U.S. Consumer Credit Falls by a Record $21.6 Billion (Update2)
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aAYZpSNGocVM
Record Plunge in U.S. Consumer Credit Signals Weakened Spending
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avvF5aNtrCfc

The Conference Board
Economic indicators
http://www.conference-board.org/economics/indicators.cfm

Goldman Sachs
Where to invest now? Sustainability of rally depends on final demand
http://www.fullermoney.com/content/2009-09-08/WheretoinvestSep09.pdf