The consumer and the retail stock sector could conceivably lead us out of this economic and stock market malaise.

After several years of believing that the U.S. consumer was possibly spent-up, not pent up, I am changing my tune.

In fact, the consumer and the retail stock sector could conceivably lead us out of this economic and stock market malaise.

This is a big change for me, but as Keynes asked, "If the facts change, do you, sir?"

As Morgan Stanley noted late last week:

American consumers are deleveraging their balance sheets and rebuilding savings faster than expected. While debt/income is elevated two key metrics indicate that the deleveraging timetable is nearly a year ahead of schedule. Looking forward, the plunge in mortgage rates will likely push debt service still lower. And the headwind to consumer spending from deleveraging will be a smaller risk to the outlook, as consumers now can spend more of their income.

We believe that 11-12% is a sustainable debt-service ratio, consistent with debt/income of 80-100%. The first of those goals likely is attainable by late this year, accompanied by real annualized spending growth of 2-2.5%, a personal saving rate remaining in a 5-6.5% range through 2011, and a 2009-11 contraction in consumer debt of about 8%. ... Lower debt service frees up discretionary spending power and makes consumers more creditworthy. Once achieved, a higher savings rate enables consumers to maintain spending, continue to pay down debt and accumulate wealth the old-fashioned way.

The absolute level of homes for sale was unchanged last month.

This morning's housing number was bullish for a residential real estate recovery in 2011.

Lost in the hyperbole surrounding the weak new-home sales data and the sizeable increase in the months of unsold inventory is the fact that the absolute level of homes for sale was unchanged (at 210,000 homes) last month.

Remember the months-of-supply metric is influenced by not only the absolute level of homes for sale but by monthly sales activity as well (which plummeted).

I would conclude that the turn in housing is closer than many believe, as the ongoing drop in new construction over the past two years is now being felt in the stability of the residential marketplace's inventory of homes for sale.

The U.S. housing market now appears to be coming closer to a balance between supply/demand.

The underproduction in 2008-2010, coupled with the likely maintenance of low interest and mortgage rates plus continued growth in population and in household formations, suggest that a recovery in housing could occur sooner in 2011 than many expect (particularly if shadow inventory trickles in but does not flood the market).

Let's take a look at the yield on the 10-year U.S. note over the last 220 years.

It is interesting to note that even during the Great Depression, when deflation ruled the day and GDP growth contracted, the yields trended between 2.5% and 4%.

It was only back in the 1940s, when the U.S. set a ceiling on interest rates, that the yield on the 10-year U.S. note trended below the current yield of 2.45%.

After the durable goods report, Goldman Sachs has lifted its expectation for a revised second-quarter 2010 GDP report.

After the durable goods report, Goldman Sachs has lifted its expectation for a revised second-quarter 2010 GDP report from +1.1% to +1.2%.

The surprisingly large drop in durable goods orders could bring a sense of urgency for policy relief.

Where is President Obama?