Then came Sept. 11, and wondering seemed pointless. The economy was critically wounded; recession seemed unavoidable. Even those stalwart American shoppers, who account for two-thirds of U.S. economic activity and whose portfolios and pocketbooks kept the 10-year economic expansion going through some pretty tough times, could hardly be expected to save it now.
And then they did. The Commerce Department, making its third and final revision to last year's economic numbers, reported Thursday that after just one quarter in critical condition, GDP in the October-December fourth quarter grew at a 1.7 percent clip thanks to a dramatic 6.1 percent rebound in consumer spending from the July-September period. Which means that statistically, at least, the recession defined as two consecutive quarters of economic contraction never happened. The expansion lives on.
And now we're asking again can they keep it up? Because now that Alan Greenspan and every other economist has pronounced the economy to be pulling out of its whatever-it-was and headed back into boom times, the kind of recovery we get in 2002 a fast-and-furious V-shape, a slow and grudging L, or worst of all, a double-dip W depends on how much consumers can improve on their 2001 performance. And the worry is that after spending to beat the terrorists, shoppers have left themselves a very tough act to follow.
In the meantime, the interest-rate cycle has turned. Last week the Fed declared itself officially out of the stimulus game, returning its interest-rate bias to neutral after 11 straight cuts and readying the markets for a return to gasp inflation watch. Greenspan won't be intervening in this economy again until it's time to slow it down, and the bond markets aren't waiting, pushing up market interest rates on those very fears. The window of opportunity that gave consumers most of their extra 2001 spending power great mortgage-refinancing deals and low-interest rate loans is closing fast.
But, see, the economy could still use another boost. Businesses, whose after-tax profits dropped 10.6 percent in 2002 (the worst in 20 years) are still climbing back toward the black and won't start investing, producing and hiring at boom levels again until they've been there awhile. Wall Street has begun to pick winners again, but a fast and full business recovery takes an influx of customers. If consumers already provided the recovery from the Sept. 11 shocks this winter (and cut a recession short in the process) can they really be expected to kick it up yet another notch for spring?
If the modern business cycle really is tamer than it used to be, if the economy is now able to roll with the most horrific punches with its expansion more or less intact, it now seems that even more than Greenspan's rate policy or businesses' New Economy agilities, the modern American consumer deserves the lion's share of the credit. Trouble is, we may be about to find out that the first New Recession the kind we're not even sure happened may come with a New Recovery that's equally undramatic.
For putting the nation back in business after Sept. 11, for buying a car even when the Joneses are still out of work, for opening their wallets when the economy needed them and then never closing them the American Consumer is, for the second time, TIME.com's Person of the Week.