NEW YORK (
) -- As investors continue year-end portfolio shuffling next week, they'll be keeping a sharp eye on jobs and consumer data that are key to a sustained recovery.
It has become increasingly clear that the economy is likely to go through an extended recovery, rather than a quick drive upward as in past recessions. In previous cycles, consumer spending and housing rebounded swiftly, but this time around, with predictions that unemployment will remain high through 2010, few expect that type of resurgence.
"High unemployment, which stands at 10% ... will slow the pace of recovery as it puts downward pressure on wages," Leo Grohowski, chief investment officer at BNY Mellon Wealth Management, said in a recent report. "Even as cyclical conditions improve, companies will remain reluctant to hire."
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There were encouraging signs on Friday, with reports showing that retail sales rose more than expected in November and that consumer confidence has gained ground this month. Those improvements come after a 0.2 point drop in the jobless rate last month, with anecdotal evidence that companies are selectively hiring or increasing hours.
Initial jobless claims, which have been declining recently, will be released on Thursday, and may provide further evidence that a job recovery is afoot. Even nascent signals that the job market is getting better can spur improvements in consumer spending.
"I think what's happening is folks are opening up their wallets a little bit as the holidays are coming along," says Benny Lorenzo, chairman and CEO of the investment bank Kaufman Bros. "It's hard to be a Grinch."
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