The 'Goldilocks' Economy

It was the year of "you." Personal videos on YouTube, personal preferences on iPods and even the hottest games were designed to play solo, reports CBS News correspondent Bianca Solorzano. Even Time Magazine's "Person of the Year" was you.

And in 2006, the consumer drove the economy -- an economy that was moving slowly but going forward.

"Personal income is up, wages are rising a little faster than inflation and the consumers continued to be resilient despite all the curve balls thrown at them," says Mickey Levy, chief economist for Bank of America.

Curve balls like the real estate market hit consumers where they live -- literally.

In the first 10 months of 2006, new building permits and housing starts both went down by 26 percent.

For most of the year there was worry over the housing bubble which at this point has sagged more than burst. Some expect a continued weak market through next year.

"Going into 2007, there are some people who still hold that view, they still think that housing has another shoe to drop," says Robert Brusca of Fact and Opinion Economics in New York. "As the year drew to a close the weakness in housing began to abate to some extent."

By year's end, oil prices -- which hit a high of $78 a barrel in mid July -- dropped to $61. As gas prices fell, consumers nerves were calmed, inflation fears were eased and the Federal Reserve stopped its steady interest rate hikes.

That helped jumpstart corporate earnings which led to unexpected record level prices on Wall Street. The market closed the year in the black.

"That's pretty spectacular when you think that earlier in the year, certainly in mid summer the market was in a negative bias and I think you would have been hard pressed to find anybody that would have anticipated the close that we are now experiencing," said Ted Weisberg of Seaport Securities.

Economists call it the "Goldilocks economy," not too hot and not too cold. Most economist say growth will continue in 2007, but very slowly. That might just lead to a new interest rate cut by mid-year, but the more cautious say the risks of a recession are rising.