Reduced consumer debt levels are a bright spot in the U.S. economy, but that alone is not enough to make the economy shine, explained Abby Joseph Cohen, senior investment strategist at Goldman Sachs.

Cohen was one of the participants at the Milken Institute Global Conference that expressed "cautious optimism" about the U.S. economy, MarketWatch reported.

Consumer debt levels have fallen substantially recently. In February, James McAndrews, executive vice president and director of research at the Federal Reserve Bank of New York, provided some perspective on the extent of the progress American households have made.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video

He said agency research revealed there was "an enormous rise in consumer delinquencies and defaults as the housing bust and the Great Recession unfolded." But, over the last few years, the reduction in household debt has been the largest the Fed's economists have ever witnessed.

"Since the third quarter of 2008, its peak, household debt has fallen by $1.3 trillion — nearly 10 percent — mostly because of declining mortgage balances," he noted.

It is commonly assumed that debt and spending have somewhat of an inverse relationship. As consumers' financial burdens are reduced, they should be inclined to spend more.

"We have the potential kindling for consumers to spend more," Cohen said. In addition to less debt, according to MarketWatch, she pointed to exports becoming a more significant contributor to the economy and to growth in business investments.

However, there are several patches of concern related to the ability of capital to flow through the economy.

To begin with, while the ability of large firms to access capital has improved, the same is not true for small businesses.

A recent paper from the Congressional Research Service says one of the grounds on which the Small Business Association argues for federal funding is that "improving access to credit by small businesses is a crucial step in supporting economic recovery and job creation."

As small business struggle to grow, Cohen pointed to fewer high-paying, blue collar jobs and added to that the declining government employment opportunities that are resulting from austerity.

"We need to figure out whether austerity is counter-productive," she urged.

Editor's Note: Startling Proof of the End of America’s Middle Class. Details in the Video