NEW YORK ( ) -- A larger number of market participants are saying that the business cycle is likely to recover in early 2010, and that it will be driven by strong demand, now that the global economy appears to have diminished the pace of contraction.

A fundamental question rises from that thought process; from where is that demand likely to come? We have two main groups to pull from here; consumers, and from industry, and both seem increasingly unlikely to assist in the expansion phase.

Consumer demand is usually driven by credit. However, credit card and loan/mortgage defaults are surging to a record high on both sides of the Atlantic, while, the velocity of money - which speaking from a theoretical point of view, measures the level of economic activity - has reached very low values for the vast majority of developed economies.

The U.S. saving rate increased exponentially, in-line with the drop of available credit, to 7% in the last few months, the highest rate seen since 1993, after being at negative rates just a little more than a year ago. This situation points to a consumer that has started saving for their financial safety, rather than building a pile of unsustainable debt as in previous decades that aided economic expansion, but ultimately proved toxic for Wall Street and Main Street.

As admirable as it is that savings have been forced on consumers, and the heady days of Main Street excess look to be fully restrained, the administration will be pushing for an increase in consumer debt to fund the expansion that pays back the stimulus packages. Strike one; the U.S. consumer will not be consuming the economy into growth anytime soon.