The United States economy grew at an annualized rate of 5.7% according to the numbers released yesterday.  While this certainly will be reviewed and revised between now and March, it is still a positive sign for an otherwise sputtering economy.

However, these numbers are coupled with a caveat.  With the unemployment rate hitting 10% and looking to stay at that level during 2010, consumer confidence seems poised to remain stagnant or even decline.  As mentioned earlier on this blog, the tie between consumer confidence and spending will prove crucial in this recovery.  Without confidence consumers will keep the purse strings tight and the economy will have to scratch and claw for every bit of production increase.

According to Gallup, people who think the economy is getting better has risen from 19-36% over the past year.  Still, 58% of people believe the economy is getting worse, which is worse than the 55% that thought so a month ago.  Consumer spending also declined from $68-52 over the past two weeks.  What does this mean?  It means people are still in stark disagreement over the state and direction of the economy.  Couple this with some declining approval ratings for President Obama, and people are looking to be cautious more than ever.

Also worth noting, government spending fell slightly, which is at least a move in the right direction.  However, this was mostly due to a decrease in military spending as the United States anticipates fewer needs in the Iraq theatre.  The expansion in Afghanistan provides an increase in cost, but should be offset by the withdrawal from the money pit we created in the Middle East.

Overall, there is still little agreement about the real state of the economy or where it will be a year from now.  Some economists now point to this vigorous growth as evidence that a U-shaped recovery will begin.  However, the unemployment rate gives credence to a slower and less rapid recovery.  I believe the unemployment rate will remain at high levels for the next 12-18 months.  The peak may not reach 11% as I had previously anticipated, but nonetheless, their will be continued suffering for the unemployed.  I still see 2011 as a better year, with one of the worst economic recessions of my lifetime coming to a close and more robust organic growth taking place.