But wait
The New York Times has some sobering news that increased consumer spending isn't due to buying more items, but spending more for necessary items.
The broader economy may be testing the bottom, but for American consumers, there appears to be no end yet in sight for falling wages and higher living expenses.
That was the picture painted Tuesday by the government’s monthly report on personal incomes and consumer spending. While consumers spent more in June, they did so because prices of food and energy were rising, and not because they were ready to spend freely again.
Personal incomes sagged as employers continued to cut wages and reduce working hours. And the personal saving rate, which had been rising, dropped sharply from a month earlier as one-time transfer payments from the government stopped arriving in people’s bank accounts.
So we don't have a return to good times-- what we have is a false rise in spending created by the fact that it takes more to purchase a gallon of gas or a dozen eggs-- and this is coupled with the fact that the amount of money available to consumers is going down.
So, the outcome of this will likely lead to more defaults on credit cards and other debts as consumers have to keep spending more for vital goods (because eating and having gas to get to work are expenses you can't do without), and must make the choice to abandon credit card and other debts.
Eventually, unless there is a change, reduced wages and increased costs in vital goods will lead to some consumers being no longer able to "rob Peter to pay Paul". The consequences of that are left as an exercise to the reader.
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