The International Monetary Fund's chief economist, Olivier Blanchard, previews the findings of the coming World Economic Outlook in a new article for the IMF's Finance and Development magazine.  Blanchard writes that the global economy is in recovery, but as we've heard from so many economists, the recovery is going to be long and slow.  Blanchard adds that it might be difficult to sustain, and that growth "will  require delicate rebalancing acts, both within and across countries."  At the center of this "balancing act" is the US.  Blanchard writes:

The United States was not only at the origin of the crisis, it is central to any world recovery. Consumption represents 70 percent of total U.S. demand, and its decline was the main near-term cause of the fall in output in this crisis. The ratio of U.S. household saving to disposable income, which was close to zero in 2007, has increased to about 5 percent. Will the saving rate go back to its 2007 level? That would not be desirable, and it is unlikely to do so.

On the one hand, some of the increase in saving in the last year probably reflected a wait-and-see attitude on the part of consumers, an attitude that will go away as the smoke clears. On the other hand, the saving rate tends to go up as output and income expand. And even if financial wealth returned to its pre-crisis level—be it in housing (which seems undesirable and unlikely) or in stocks—and output returned to its trend path, U.S. consumers still would probably save more. The reason is that the crisis has made them more conscious of tail risks—events that are unlikely to occur, but when they do have devastating consequences.

So, it appears, the US consumption is not going to reach pre-recession levels--or at least not anytime soon.  So what will drive recovery?  Blanchard suggests that the best hope comes from Asia, where China and Asian emerging markets could help by importing more--though their incentives to do so are not immediately clear.  

Read Sustaining a Global Recovery here.