Montreal, Canada

Back in 2008 before crude oil prices peaked north of $147 a barrel, some bears were forecasting big trouble for the world economy. That's because high oil prices have historically stalled domestic consumption, economic growth and corporate profits.

By July 2008, the looming credit crisis had already erupted across world markets sending commodities prices into the basement by the time Lehman Brothers collapsed in mid-September. From its all-time high in July 2008 crude oil is down 43.5%.

A recent study of past economic recessions determined that when oil expenditures surpassed 4% of gross domestic product (GDP) in the United States a recession or major slowdown in consumption materialized. Right now, we're at that 4% level of GDP, which works out to about $82 a barrel, according to Steven Kopits, managing director of energy brokerage Douglas-Westwood in New York.

If the above is indeed accurate then $83 oil now poses a clear and present danger to the fragile state of the global recovery since early 2009. There's no doubt the state of the consumer is far less predictable now than compared to 2008; unlike mid-2008, leverage was still widespread across swaths of finance while the unemployment rate was well below the current 9.7%.

Can a credit-starved economic recovery handle $85-plus crude oil? True, credit markets have healed since the dark days in late 2008 as spreads continue to narrow and companies are raising funds again. However, commercial and industrial loans in the United States are still contracting in 2010 – a major hurdle impeding a lasting economic recovery.

Judging by recent trends in consumption it doesn't look like individuals are consuming less gas ahead of the summer driving season, which begins around Memorial Day.

Consumer confidence remains at low levels to be sure.

But consumers have boosted consumption in some parts of the economy over the last 12 months, including retail spending, housing and autos. Tax credits have helped spur sales in housing recently and also acted as a boon for auto sales (cash for clunkers). On April 30th, U.S. government housing tax credits will expire.

I'm not sure consumers will continue to spend if the employment rate doesn't improve. High oil prices won't spur spending, either. Also, there's no assurance the stock market will remain elevated as investors continue to recover from the Panic of 2008. By all measures, the stock market is heavily overbought and hasn't declined more than 9% from its post-March 2009 peak.

What is apparent, however, is that domestic consumption in the United States is recovering off the lows earlier in 2009 as financial markets rebound and government tax credits make housing attractive at these levels. Also, history has shown us that the deeper the financial crisis or recession, the bigger the corresponding economic rebound.

Still, you've got to wonder how the economy is going to boom again anytime soon when interest rates are heading higher, tax rates have bottomed and, starting in 2011, the Bush tax cuts expire, sending dividend tax rates higher from the current 15% in place since 2003. More than ever, big business has to start spending again because the consumer will struggle with deleveraging over the next several months and high oil prices.

This time, the U.S. consumer doesn't have the juice to spearhead a sustainable recovery.