Coming Week: Test of Nerves

The data will take on perhaps even greater-than-normal importance given the rising concern about the U.S. economy, as embodied by the reaction to Alan Greenspan's comments about a "possible" recession and the downward revision to fourth-quarter GDP. In addition, the four-week moving average of weekly jobless claims has climbed to 335,000, the highest since October 2005.

Jobs are critical, of course, to consumer spending and confidence, "but also if you add jobs as an employer you have to give employees tools to do their work," says Tobias Levkovich, chief U.S. equity strategist at Citigroup. "From that perspective, job growth is also a meaningful phenomenon in capital spending. There's a very tight relationship."

Levkovich notes consumer spending has remained robust in recent years despite the sharp decline in mortgage-refinancing activity, falling home prices and rising energy prices. That resiliency is due, in large part, to continued strength in the jobs market vs. the conventional wisdom that Americans used their homes as ATMs, he says.

"If Americans were spending [all] their home equity, then real consumer spending should have been up 8% to 12% in past four quarters vs. less than 4%."

The state of the consumer will also be revealed this week via earnings from retailers such as American Eagle Outfitters (AEOS Quote), Urban Outfitters (URBN Quote) and Chico's (CHS Quote).