The world should thank American shoppers. They've kept buying, despite all the reasons they have for pinching pennies.
Their spending has moderated the slide in the U.S. economy largely caused by the housing market collapse. U.S. consumers also have fueled growth abroad, where many economies are expanding at a much faster pace than what has been seen here.
Whether that continues is shaping up as one of the key questions of the day. Morgan Stanley's chief global economist Stephen Roach says it best: If the lead engine of the global growth train goes off the tracks, the rest of the world will be quick to follow.
That throws cold water on the idea that the global economy is decoupling, a theory advanced by some economists who claim that just because U.S. growth is slowing, economies elsewhere can still thrive.
Supporting that view is the fact that the U.S. economy decelerated from a 3.2 percent annual growth rate in 2005 to around a 2.2 percent pace expected this year. At the same time, Europe has seen growth accelerate from 1.4 percent two years ago to expectations of 2.3 percent in 2007, and Japan has seen its pace go from 1.9 percent to estimates for 2.3 percent this year. In developing economies, like China and India, the growth is expanding far faster.
The cause of those divergent expansion rates largely has to do with a slowdown in U.S. housing and manufacturing - and not a broad-based shock to consumer spending caused by surging oil prices or a major stock market correction, the International Monetary Fund said in its just-released 2007 World Economic Outlook.
The bigger gains in domestic demand in some foreign economies also should be factored into why growth abroad has outpaced U.S. growth. At the same time, some countries are less reliant on U.S. trade as they once were, the IMF report said.
But believing that the U.S. economy's moves doesn't sway growth elsewhere overlooks the power of American shoppers. Since their spending has remained strong in recent years, the worldwide economy hasn't had a legitimate decoupling test, Roach said.
Recent data show that annualized real U.S. consumption has averaged 3.2 percent growth - down only 0.2 of a percentage point from the growth pace of the preceding three years, Roach said.
That's surprising given that consumer confidence has been rattled by the housing recession and the implosion in the subprime mortgage market, which has tightened credit everywhere. U.S. consumers are also facing rising energy and food prices.
Spending has held up largely due to the fundamentally sound U.S. labor market. The unemployment rate dropped to 4.4 percent in March, matching a five-year low, as employers boosted hiring by 180,000 workers, the biggest gain in payroll jobs in three months, Labor Department figures showed.
While that should keep the U.S. economy from tumbling into a recession, growth still won't be strong compared with the global outlook. The IMF projects U.S. growth to slow to 2.2 percent this year, the weakest since 2002. Worldwide growth is expected to expand at a brisk pace of 4.9 percent, the IMF said.
If the U.S. labor market continues to display extraordinary staying power in the face of adversity elsewhere in the economy, the overly indebted, saving-short American consumer will squeak by once again - and so, too, will the rest of a still-coupled world, Roach said.
With so much reliance on U.S. shoppers to keep global growth afloat, recent news that some retailers expect tougher times ahead should be noted.
Wal-Mart Stores Inc. was among those sounding warnings. The world's largest retailer said it expects April's selling environment to be tough. Federated Department Stores Inc., owner of the Macy's chain, said its first-quarter sales will come in at the low end of expectations, while Children's Place Retail Stores Inc. said its first-quarter earnings per share will be roughly flat with last year's results, causing it to likely miss Wall Street estimates.
Countries counting on U.S. shoppers to buy everything from toys to T-shirts have the most at stake.
American shoppers have done right by the global economy for a long time. The world better hope they continue to feel optimistic.