On Recent Consumer Spending Data

Yesterday's Wall Street Journal reported the better-than-expected consumer spending data released that morning. It was a major topic of discussion on CNBC, as well.

Despite December's -.4% reading on this measure, yesterday's January value was +.3%.

I confess to being puzzled by the resulting, if it was a result, or at least subsequent S&P500 rise of 1.36% yesterday.

If you think, as so many would-be and wannabe economists contend, that the US economy is either in, or entering, a period of recession, then how can this spending number be good?

Isn't this the sort of data point that has doomsayers wringing their hands about American consumers borrowing and spending China's and the Gulf's wealth?

Where are the harbingers of US economic decline, telling us that, once again, we are failing to save, and behaving in spendthrift ways?

If you believe that available wealth has diminished, due to last year's credit markets turmoil, which ultimately helped lead the S&P500 to 12 percentage points of decline in recent months, how can this spending be good for our economy?

I don't get it.

Mind you, personally, I don't buy the now decades-old worries about the American consumer being on his/her last few months of creditworthiness. That any time now, the economy will collapse under a mountain of unsustainable, unserviceable consumer debt.

And I am not concerned about the spending rise. I think it's a sign that the US economy is probably not in, nor actually going to experience, a recession. More likely, after a perhaps two more quarters, we will see that our economy simply underwent a decline in its positive growth rate from a higher level, to a lower, but still-positive level.

But if you do believe those who warn of the end of creditworthy consumers as we knew them, as many pundits continue to, please explain how this +.3% rise in consumer spending is possible and/or desirable?

And why did it lead to, or is associated with, a hefty rise in the S&P500 that day?

Could it be that the investors are not as gloomy as many pundits. Could it be that, upon seeing the positive consumer spending number for last month, many investors concluded that economic woes are neither as severe as some would have us believe, nor likely to be as long-lived?