How Will Consumers Behave? - Consumers account for two-thirds of U.S. spending, and this drives the economy. So far this year consumers have been slowing down on spending, retiring credit debt. The question posed by Michael England in a recent article for Business Week is “Will the consumer’s sustained caution of 2009 reverse course in 2010, or will the consumer pull back further?”

If the past two week’s retail stores and parking lots are any indication of what the New Year will bring, consumers are showing a willingness to spend and this could carry over into 2010.

How Will Businesses Behave? - This past year we have seen a precipitous drop in business spending as well as with consumers. The concern is that while the TARP legislation is showing some signs of relief for the financial sector corporate profits are outpacing spending. Corporate bank accounts are swelling. Business has yet to shift from a “cash preservation” strategy to one of growth for the economy to ignite.

A rebound in lending activity goes hand-in-hand with a shift toward inventory stocking as companies prepare for the flow of resources and manufactured goods.

A measure of pessimism has no doubt fueled the decline in commercial real estate and it will take a sustained resurgence in the economy for this sector to regain its footing.

How Will Trade Fair? - Domestic and foreign trade is an integral component of a healthy recovery Import/Export trade will indicate just how well the undergirding of jobs and wages will expand.

What About U.S. Housing? - For the past couple decades housing has been the bright spot in the economy. But for the past three years housing has been its Achilles heel. A sharp rebound in pending, existing home sales and housing starts in the latter half of 2009 is providing a solid base for growth into 2010. The final outcome relies on the answer to the final question.

How Will The Fed Credit Drain Play Out? - This is the toss-up question. It will be difficult to keep a lid on interest rates and continue to print and spend with abandonment. At some point rates, prices will meet up with an inflating dollar and those adjustments will be made both domestically and internationally. To date Washington has not given an indication of how they are going to lead through these waters.