Jill Schlesinger: The Week Ahead

A trader watches a screen at Madrid's Stock Exchange on Thursday, May 6, 2010. European stocks have steadied despite a plunge in Asian markets as investors worried that Greece's debt crisis could spread to other countries but hoped that the European Central Bank could offer some guidance and support later in the day.
AP Photo/Victor R. Caivano
A trader watches a screen at Madrid's Stock Exchange.
AP Photo/Victor R. Caivano

"How can the economy lift off under the massive weight of huge public and private debt burdens? Why is it reasonable ... to expect more consumer spending at a time when surveys show widespread pessimism and growing fear of unemployment?"

— Jan. 2, 1992 Wall Street Journal, 9 months after the end of the 1990-91 recession, and moments before the start of the massive bull market of the 1990s.

This quote is particularly interesting after last week's Congressional testimony by Fed Chief Bernanke. Lawmakers grilled Bernanke about the deficit, and investors wondered how in the world stocks could rise under the weight of burgeoning global deficits.

And it's not just sovereign nations in Europe that are carrying a load — U.S. consumers still have a mound of debt.

According to the Wall Street Journal: "As of the end of March, the average U.S. household's total mortgage, credit-card and other debt stood at 122% of annual disposable income, meaning it would take a bit more than 14 months to pay it all off if everyone stopped spending money on anything else. That sounds like a lot, but it's better than it was before: At its peak in the first quarter of 2008, the debt-to-income ratio stood at 131%. Economists tend to see 100% as a reasonable level, so we're almost a third of the way there."

The retail sales report marked a decline, a worse-than-expected 1.2% (retail sales are up 8% from the bottom, but still down 4.6% from the pre-recession peak). A Gallup poll noted that wealthy and older consumers are responsible for much of the spending that's occurring, while middle and lower income spending remains unchanged.

As 4 p.m. rolled around on Friday, the focus seemed to shift away from "the only logical direction for the stock market is down" to "did you hear that that the World Cup is starting?"

DJIA: 10,211 up 2.81% on week, down 2.08% YTD

S&P 500: 1091 up 2.51% on week, down 2.11% YTD

NASDAQ: 2219 up 1.1% on week, down 1.13% YTD

July Crude Oil: $73.78, up 3.17% on week

August Gold: $1,230.20, up 1% on week

Total bank failures for 2010 = 82 (1 new bank failure over weekend)

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    Jill Schlesinger, CFP®, is the Emmy-nominated, Business Analyst for CBS News. She covers the economy, markets, investing and anything else with a dollar sign on TV, radio (including her nationally syndicated radio show), the web and her blog, "Jill on Money." Prior to her second career at CBS, Jill spent 14 years as the co-owner and Chief Investment Officer for an independent investment advisory firm. She began her career as a self-employed options trader on the Commodities Exchange of New York, following her graduation from Brown University.