Are we spending or not?

Hold the doom. November's surprisingly strong retail sales report suddenly has analysts raising the possibility of a solid holiday shopping season, a prospect that was not in the cards 24 hours ago. It's not just that the overall sales increase for November was better than expected. It's that many of the sub-categories did well. Here are some comments, courtesy of Real Time Economics:

--Consumers are feeling more confident, as shown by the improvement in consumer sentiment in early December. They are still spending cautiously, with a keen eye for bargains, but spending is growing. Nigel Gault, IHS Global Insight

--While we continue to believe consumers can continue spending during the deleveraging process, the difficulties in the labor market, the desire to reduce and the tightening of lending standards of all kinds should serve to cap the pace at which spending will rebound in 2010. Dan Greenhaus, Miller Tabak

--The results are in, and...well, not bad, to be honest. After the late Thanksgiving holiday had us bracing for a push of retail activity into December, the data proved these concerns wrong and are actually pointing towards a decent holiday selling season. Guy LeBas, Janney Montgomery Scott

--This was a remarkably strong report, and it suggests that the positive momentum seen in U.S. consumer spending in recent months is gaining steam.Millan L. B. Mulraine, TD Securities

Keep in mind there's a small group of economists who have maintained for some months that the recovery would be far more robust - and happen far quicker - than the conventional forecasts would suggest. Ed Leamer at the UCLA Anderson Forecast is not in that group, but he doesn't rule out the possibility of a surprise recovery. (The official forecast calls for modest growth over the next two years.) Here's how Leamer concludes his most recent report:

It is hard to be optimistic about consumers leading us out of this recession, but it's best to recognize that the problem with household balance sheets is mostly about mortgages and home prices. It's the uncertainty about the future that is really killing us; it's not processing the bad news that has already arrived.

Curiously, stocks are being pretty low-key about the government report - the Dow is up, but only by about 50 points. One reason could be a strengthening dollar, not great news for a lot of companies that do business overseas.