Bearish commentators have been insisting heavily on the lack of resumption in consumer spending to justify doubts on a US recovery, or even the possibility of a double-dip recession by 2010 (other commentators have ascribed a possible double-dip to hyper-inflation, so you can make your choice in the matters of bearish scenarios).

However, an important factor that might be missed is the increase in US savings. In a recent interview,  Jim McCaughan, a representative of Principal Global Investors, pointed out some elements to give a more nuanced image of the US economic situation.

Whereas he believes that a number of smaller banks shall not be able to survive the losses on RE loans, he points out that the larger banks have been adequately immunized by their capital raise. While a lot of reservation can be expressed as to his assessment that US large banks are "transparent", it remains that the logic of "too big to fail" holds true.

However, McCaughan also points out that the short-term perspectives might be bleak for the economy, considering that the high savings rate also means less consumer spending. But and that's a point worth noticing, he also points out what I've been considering as a "paradigm change". The high rate of savings is a negative aspect if you take a keynesian perspective; in a monetary perspective, a high rate of savings means more money available for investment.

The danger in considering only the negative side of the hike in savings is of missing the formidable paradigm change and the chance for the US economy if no other issue adds up on to the current predicament.

The reduction in spending means of course a reorganization of the economy and an evolution of the various sectors in order to adapt to more frugal consumers and to use to the best the cash made available by the savings. For one thing, this cash could help to absorb a part of the US debt nationally, and it might be invested into the development of new technologies or sciences. On the whole, once the necessary adjustments done, the economy could emerge stronger, with a strong investment arm (provided that the banking culture is reordered towards longer-term objectives rather than high short-term returns), and provided the necessary steps are taken, with a new industrial sector.

However, precisely because the recession has been accompanied by enormous productivity gains, it should not be expected that personnel is going to be hired in droves any time soon.