TORONTO - The Toronto stock market could be in for some summer doldrums trading this week after a double-shot of poor U.S. economic data raised questions about how much strength the American consumer can provide to an economic recovery.

The TSX snapped four straight weeks of gains last week, losing 37 points or 0.35 per cent after a report Thursday showed that U.S. retail sales unexpectedly dropped last month. Economists had expected a rise in sales of 0.7 per cent - instead they dropped by 0.1 per cent.

And on Friday, the University of Michigan's consumer sentiment index for August came in at 63.2, worse than the 69 that economists expected and down from 66 posted in July.

"The U.S. we have to remember is still important globally (and) the U.S. consumer is still a big player in the global economy," said John Johnston, chief strategist at The Harbour Group, RBC Dominion Securities.

Last week's showing left the Toronto market up 43 per cent from the lows of early March, when investors fearful of a financial sector meltdown were pricing in a full-fledged depression.

The U.S. consumer accounts for around 70 per cent of the U.S. economy and 20 per cent of the global economy.

But some analysts aren't all that sure if the strength of the U.S. consumer really matters that much in terms of keeping the rally on the Toronto market on the rails.

Doug Porter, deputy chief economist at BMO Capital Markets, makes the point that "the last thing we need in this recovery is for the U.S. consumer to be leading the way."

"After all, it was really over consumption by the U.S. that really got us into a lot of these problems," he observed.

"We should be looking for the rest of the world to boost its consumer spending and I think on that front there was some encouraging news."

Porter said there has been a recent string of strong retail sales and auto sales reports out of China along with the news that France and Germany, Europe's two biggest economies, surprisingly grew in the second quarter of the year as well.

He also noted that the recent retail sales and consumer sentiment reports don't tell the whole story on consumer strength.

"Even with the pullback in consumer spending in the past year, consumer spending as a share of U.S. GDP was still at a high in the second quarter because the rest of the economy weakened even more than consumer spending," he said, noting that U.S. consumer spending accounting for 70 per cent of the U.S. economy is way out of line with the rest of the world.

"Canada is in the mid-50s, China in the mid-30s and the only major economy that's anywhere close to the U.S. is Britain, and they have issues of their own," said Porter.

He also said that the healing in the global economy is "just a huge plus" for the Toronto market, which is heavily weighted in favour of energy and mining companies.

"Our core view is that Toronto will outperform New York on a sustained basis." he said.

"We don't think that's a short term story - I think we're in the middle of a very long, relative upswing, much as the Canadian market outperformed through almost the entire 1980s and 1990s, it outperformed for almost all this decade and it wouldn't be a shock if it outperformed for another decade."

However, what is worrying for the Toronto market in the short term is the time of year, setting the market up for a correction.

"Most of the weakness each year is concentrated on two months -early September to late October," said Johnston, adding that the U.S. S&P 500 does the same thing.

"We've had a great advance, we've built in a lot of good news, at some point there is going to be a good sized pullback and maybe it takes a little longer until we get some of that money off the sidelines."