“WHEN WILL WE EVER LEARN?”

5/3/10

I received the following News Alert from the Wall Street Journal this (i.e., Monday, 5/3) morning:

U.S. consumer spending rose twice as fast as income in March as saving dropped
to its lowest level in 18 months and a closely watched indicator of inflation
remained stable, the Commerce Department reported.

Consumer spending increased by 0.6% from the prior month, likely lifted by
government efforts to spur economic growth, but personal income rose just 0.3%
on a weak labor market. As a result, the U.S. saving rate dropped to 2.7%, its
lowest level since September 2008.

The mewing flock of analysts and deep thinkers in the financial media and the analytical community took this as unmitigated good news.

Give this just a little time; we’ll get savings rates below zero again. And, of course, the financial media and the analytical community will take our crossing that line as the financial equivalent of the Second Coming. We will be assured, again, by the mewing class that negative savings rates are both misleading and healthy because of our ever growing wealth in the forms of our houses and stock portfolios.

One is tempted to say that the American people have very short memories, but such an observation would assume that we indeed have memories.