It's going to get worse before it gets better, according to Stone & McCarthy Research. Early 2010 has "the more troublesome outlook," as the economy will have to walk on its own, the research firm says. This year, it's had a pair of crutches: tax credits for first-time home buyers and the cash-for-clunkers program. So, if the stimulus hasn't taken hold by the end of the year, the first quarter could be a bruiser.

The firm adds that "continued growth in aggregate demand" is needed, bringing the discussion back to consumer spending . . . which is where it will always land. We're likely to see the 3.2% growth rate from July through September drop to 2.4% at the end of the year because the crutches will have been gone. And, let's not forget that unemployment is expected to break the 10% level next year.

We've watched stock market numbers bounce around for two years. Unemployment stats have served as unpleasant reminders that, for some, leading indicators haven't translated to reality. We look for so many ways to understand the brutal economic environment with which we've had to contend, and all the choices can make your head spin. So, let's make it simple. Here are eight ways to tack a label onto the financial world in which we live.

1. Lost market value
Total stock market losses from October 2007's top to March 2009's bottom: $11.2 trillion
Total gains in the stock market since the bottom: $4.6 trillion
Lost ground: $6.6 trillion

2. Bad days
Percentage of the 10 worst days in history for the Dow Jones Industrial Average that happened in 2008, by point drops: 60%
Percentage of the 10 worst days in history for the DJIA that happened in 2008, by percentage drops: 30%

3. Mutual funds
Value of mutual fund assets at the end of 2007: $6.5 trillion
... and a year later: $3.7 million
Lost value: $2.8 trillion

But, it got a little better at the end of August 2009: $4.5 trillion (value of assets)

Consumers are finally spending more, with September posting the first gain in more than a year. The International Council of Shopping Centers and Goldman Sachs (NYSE: GS) found that retail sales inched 0.1% higher last month. It doesn't seem like much, but a gain when you anticipate a fall is good news magnified. But, it came at the expense of great deals and other tools to entice somewhat hesitant customers into stores.

Kohl's (NYSE: KSS) and Limited Brands (NYSE: LTD) reported sales increases in September for stores open more than a year. J.C. Penney (NYSE: JCP), Macy's (NYSE: M) and Target (NYSE: TGT) posted declines, but they were better than expected. Delayed school openings thanks to a late Labor Day helped push to September sales that might have occurred in August otherwise.

Of course, all eyes are on the coming holiday season. The National Retail Federation forecasts U.S. consumer spending of $437.6 billion – up only slightly from $433.7 billion four years ago. So, we still have a lot of ground to make up before we can celebrate a recovery. As long as the situation is staying steady, though, we'll at least have a solid starting point.

September same-store sales are rolling in this Thursday morning, and the news for the teen/tween retailers may hold some hope. Leading off the clothing genre is American Eagle Outfitters (NYSE: AEO), which posted perhaps the best news in the group. Of course, by best news I mean that AEO's sales didn't drop as much as people predicted.

The retailer had flat same-store sales in September, at the top end of its forecast range for a drop of 4.1% to flat sales. Thing is, these results will probably spur a bit of a rally for the stock, mainly because they weren't as bad as they could have been.

Consumer debt levels fell again in August for the seventh month in a row. Facing continued instability in the job market, people are paying down their debt, as a way to protect themselves. Savings are up, and borrowing is down – which could weaken the recovery. Consumer spending accounts for 70% of economic activity in the United States.

Total consumer debt outstanding dropped by $12 billion in August, according to the Federal Reserve, reflecting an annualized rate of 5.8%. Reality outpaced Wall Street's expectations, which were around $10 billion. In July, consumer debt outstanding fell $19 billion (9.1%), which was the largest in hard-dollar terms since 1943 and on a percentage basis since June 1975's 16.3%.

While consumer fear is playing a significant role, as a touchy housing market and dicey job situation leave little to lean on, the banks are also responsible for the change in direction. They aren't lending as easily, with stricter standards limiting the amount of credit available to consumers. You can't spend what you can't borrow.

MasterCard Advisors (NYSE: MA) service SpendingPulse says luxury and electronics sales headed upward last month, in a pleasant deviation from what became the norm all too long ago. A few other product categories posted gains as well – showing stability, if not a recovery. But, at this stage of the game, we'll take what we can get, right?

Luxury sales, not including jewelry, gained 3.4% year-over-year – that's an increase of $891 million. Last September, luxury goods suffered a 9.4% decline. Yet, this category is still below its September 2005 level of $94 million. Jewelry sales gained 1.2% relative to last year, compared to a year-over-year decline of 5.8% a year ago. Compared to apparel sales, this is a profound turn. In September 2008, the clothing category was off 5.7%, and this September, it was down only 2.9%.

Retail sales numbers jumped more last month than they have in three years. It would be understandable to assume that this was due to the "cash for clunkers" program, which ran through August, but even excluding auto-sales retail numbers were higher than expected.

Core retail sales (which excludes autos and gasoline) was up 1.1% in August, which was almost 300% higher than anticipated. The question at this point is whether that number would have been even better and ultimately more beneficial for the economy if the government had not siphoned so much spending into autos.

Retailer BJ's Wholesale Club (NYSE: BJ) stepped into the earnings spotlight this morning, reporting second-quarter earnings of 64 cents per diluted share. A year ago, BJ reported net income of 61 cents per diluted share, including three cents per share from favorable state income tax audit settlements.

During the first half of 2009, BJ raked in $1.09 per diluted share compared to 90 cents per diluted share a year ago. Quarterly sales slipped slightly more than 5% to $2.5 billion on a year-over-year basis, but the bulk retailer did forecast full-year sales to increase 0.5% to 1.5%. On the forecast front, BJ now expects full-year earnings between $2.46 and $2.56, which is higher than the previously forecast $2.44 to $2.54.

Last summer we lamented the price of gas. This year, however, there's at least one upside. Retail sales for June were up 0.6% - substantially better than the 0.4% anticipated – with the gas prices leading the charge. A slight tip in the brutalized auto manufacturer sector helped, as well. This was the largest retail sales increase in five months.

Gas stations benefited from the cost of fuel, adding a bit of pep to a beleaguered retail industry: sales were up 5% year over year, after doing the same in May. And, car dealers had their best month since January: the sales of cars and parts climbed 2.3%. Nonetheless, this corner of the retail world is still off 14.5% from last year. It may have helped last month, but we're still pretty far from a cure.

According to the National Retail Federation (NRF), the back-to-school shopping period isn't expected to be strong enough to help retailers. During the past five years, this shopping period has increased; but the NRF has forecast a drop of 7.5% to $47.5 billion this year.

This isn't just a slight drop, a 7.5% drop in sales is rather staggering. In fact, roughly half of the shoppers questioned plan on spending less this year when searching for goodies to take back to school. Ken Perkins of Retail Metrics notes that this isn't just a problem for retailers during the upcoming shopping season, weak back-to-school sales is "likely a harbinger of another difficult holiday shopping season."

Recession or not, people can't walk around naked ... especially not in the United Kingdom. (Iceland in summer? Fair game.) Marks & Spencer Group Plc (London: MKS:UK), the largest clothing retailer in the country, just sustained its smallest drop in sales in nearly two years thanks to some savvy deals (offered to consumers) and warm weather. After making their dollars pounds stretch for so long, shoppers were finally ready for a bit of style.

Revenue declined a modest 1.4% for the year so far, much better than the 2.5% average estimate offered by 16 analysts. This was good enough to push M&S shares up 4%. If all goes well, same store sales may start to increase soon, which means that a full recovery will be right around the corner. Same store sales have fallen for the past seven quarters, and company cut its dividend for the first time in almost a decade.

The discounts that helped lead to the recent M&S sales performance are responsible for 18% of the company's food sales (which are down 0.5% on for same store) – much better than the 2.4% estimate. General merchandise fell only 2.4%, beating the 3.5% projection handily.

Since late last year, retail has been hurt as the recession dug in for the winter and stayed throughout the start of the 2009 summer. Although job loss data for May just in indicates a steep drop (leveling off perhaps?), consumers are still pinching pennies and keeping savings under the proverbial mattress. One of the continuing casualties -- Target Corp. (NYSE: TGT).

The second-largest discount retailer in the U.S. said that same-store sales for May came in at a -6.1% level -- worse than analysts had forecast. Target CEO Gregg Steinhafel indicated sales "were somewhat below our expectations." By comparison, average same-store sales from 32 retailers in May dropped 4.6%, putting Target at a worse-performing range than most.

Mega-retailer Wal-Mart Stores (NYSE: WMT) announced today that it will add more than 22,000 jobs this year. The firm will add these jobs by adding positions to its current stores, building, or expanding. The 22,000 jobs will be in store management, pharmacies, human resources, customer service, cashiers, and sales staff.

WMT says that its customer base is expanding thanks to the economic downturn, as shoppers are looking for lower prices during tough economic times. That said, the company has jettisoned 1,800 employees since the year began -- with 700 to 800 positions cut at its corporate headquarters, 400 when it closed a regional return center in Georgia, and 650 cut when WMT closed an eyewear facility in Ohio.

Trendy retailer Gap Inc. (NYSE: GPS) announced Thursday that its first-quarter earnings declined compared to a year ago. The khaki king's earnings were pulled lower by poor sales due to the economic crisis. That said, the company's quarterly earnings topped the consensus estimate.

For the quarter, Gap earned 31 cents per share, down from 34 cents a year ago, but a penny better than analyst projections. Sales for the quarter dropped to $3.13 billion, matching the Street's expected $3.14 billion.

This bit of bad news may be good news in disguise: Retail sales fell 0.4% in April. Considering retail sales fell 1.3% in March, we could call this recent data mini-bad news. For the year, sales were down 10.1%.

Retail sales are key to the U.S. economy, comprising 70% of U.S. Gross Domestic Product. Last month GDP showed a rise of 2.2% annualized with a jump of 9.4% in consumer durables. Inside the larger number, sales of electronics dropped by 2.8% and petrol station sales fell 2.3%. Building materials and health care rose.